Pre-Sorted Standard US Postage Paid Boston, MA Permit No

- England IN-HOUSENew -Baker Signet 42 = “New England”

Utopia Black 89 points = “In-House”

Pre-Sorted StandardU.S. Postage Paid

Boston, MAPermit No. 55916

Electronic Service RequestedLawyers Weekly

10 Milk Street., 10th FloorBoston, MA 02108

February 2015 Vol. 13, No. 1

By Thomas E. Egan

A department store could not be held liable for failing to accommodate a diabetic sales associate’s request to work only a midday shift, the 1st U.S. Circuit Court of Appeals has ruled in a split decision.

The defendant employer argued that it complied with its duty under the Americans with Disabilities Act to engage in an interactive process regarding reasonable accommodations, but that that the employee refused to take part in that process.

A 2-1 majority of the 1st Circuit agreed.

“The refusal to give [the employee]’s specific requested accommodation does not necessarily amount to bad faith, so long as the employer makes

an earnest attempt to discuss other potential reasonable accommodations,” Judge Juan R. Torruella wrote for the majority. “[W]e conclude that [the employee]’s refusal to participate in further discussions with [the employer] was not a good-faith effort to participate in an interactive process.”

Judge William J. Kayatta Jr. dissented.

“As best as I can tell, this is the first time that any circuit court has held that an employer can reject an accommodation request backed up by a doctor’s note, refuse to offer an accommodation that it has determined it can make, falsely claim that any accommodation must be offered to all workers whether disabled or not, and then declare the

employee’s ADA rights forfeited when she gives up,” he said. “Such a holding demands too much resilience and persistence on the part of a disabled and stressed-out employee, and takes away from jurors a task they are well-suited to perform.”

The 30-page decision is Equal Employment Opportunity Com-mission v. Kohl’s Department Stores, Inc.

Donna J. Brusoski of Virginia argued on behalf of the EEOC. Maine attorney Melinda J. Caterine represented the employer.

Shift requestPamela Manning, who suffers

from Type I diabetes, was employed as a full-time associate

ADA suit denied over failure to negotiate

WIKIPEDIA COMMONS

ISTOCK

Kohl’s Department Stores not liable, 1st Circuit says

By Eric T. Berkman

An employee who was fired for timecard violations that he claimed were reported to management out of retaliatory animus could not sue his employer under a “cat’s paw” theory of liability, the 1st U.S. Circuit Court of Appeals has ruled.

Under the “cat’s paw” theory, an employer who disciplines or fires a worker for legitimate reasons can still be held liable for discrimination or retaliation if the information the decision-maker is acting on was provided for discriminatory or retaliatory reasons.

In the case before the 1st Circuit, the plaintiff employee claimed that the supervisors who reported his timecard violations to an upper-level manager — who, in turn, made the decision to fire him — did so because they resented that he took leave under the Family and Medical Leave Act. Accordingly, the plaintiff argued, the defendant employer should be held liable for FMLA retaliation.

But the 1st Circuit disagreed, affirming a U.S. District Court judge’s summary judgment for the defendant.

‘Cat’s paw’ retaliationcase fails at 1st CircuitFired employee cannot prove unlawful animus

The plaintiff employee claimed that the supervisors who reported his timecard violations did so because they resented that he took leave un-der the FMLA.

Co. waived arbitration with ‘litigation conduct’By Brandon Gee

A defendant corporation that actively litigated its former CEO’s lawsuit for six months could not then compel arbitration after its motion to dismiss was denied in part, a Superior Court judge in Massachusetts has found.

The defendant, Arctic Sand Technologies Inc., alleged a contractual right to binding arbitration under its employment agreement with plaintiff Nadia Shalaby, and argued that any questions about the arbitrability of

her claims should be determined by the arbitrator.

Judge Kenneth W. Salinger disagreed.

“The court finds that Arctic Sand waived any contractual right to arbitrate Dr. Shalaby’s claims by deliberately waiting six months before seeking to compel arbitration, and by actively litigating the case in Superior Court in the meantime,” the judge wrote. “It made no attempt to invoke its alleged contractual right to

Continued on page 10 Continued on page 7

Continued on page 11

Kohl’s Department Stores can’t be held liable for failing to accommodate a diabetic sales associate’s request to work only a midday shift, the 1st Circuit rules in a split decision.

August 2015Vol. 13, No. 3

By Thomas E. EganA railroad worker could not sue

for racial discrimination based on his claim that he received fewer op-portunities for overtime hours than some of his colleagues, a U.S. Dis-trict Court judge in Rhode Island has held.

The defendant employer, Amtrak, argued that its overtime schedule at-tempts to ensure that OT is distrib-uted equitably, in accordance with a

collective bargaining agreement.Judge Mary M. Lisi agreed.“In sum, there is no evidence to

support [the plaintiff]’s contention that his alleged decrease in oppor-tunities for selecting overtime slots

was the result of race-based discrim-ination or that the overtime distribu-tion plan was changed based on an illegal discrimination criterion, nor does [the plaintiff] refute Amtrak’s proffered reason that the overtime distribution scheme is intended to ensure that overtime is distributed equitably,” Lisi wrote.

The 22-page decision is Garmon v. Amtrak.

The plaintiff was represented by Christopher J. Trombetta of Mans-field, Massachusetts. Defense coun-sel was Thomas J. McAndrew of

By Kris OlsonA field hockey player can sue her coach and school for

failing to respond in a “reasonably prudent” manner after she suffered head injuries on the field, a trial court judge in Massachusetts has decided.

Citing Supreme Judicial Court precedent, the defen-dants argued that the plaintiff student should be allowed to recover for her injuries only if she could prove that the school and coach were reckless in permitting her to re-turn to the field prematurely after suffering a concussion.

But Superior Court Judge Peter B. Krupp said negli-gence was the appropriate standard.

“While the fact that a coach is acting in an athletic com-petition may affect what the duty of care requires in a game-time setting, the better authority indicates that a player’s own coach must exercise that degree of care of a reason-ably prudent coach (i.e., the negligence standard) and may face liability without proof of recklessness,” Krupp wrote in denying the defendants’ motion to dismiss.

As a private school, defendant Thayer Academy may not be subject to the state’s relatively new law regarding head injuries and extracurricular athletics, G.L.c. 111, §222. But in a footnote, Krupp noted that even if the stat-ute “does not apply to Thayer … or does not establish an independent cause of action for its violation … the stat-ute likely affects the duty of care a coach owes to her play-ers to prevent head trauma.”

The four-page decision is Dugan, et al. v. Thayer Academy, et al.

A pervasive issueIn its 1989 decision Gauvin v. Clark, the SJC had a

sound “policy rationale” for adopting the recklessness standard for injuries that occur during competition, ac-knowledged plaintiffs’ attorney Christopher M. Reilly of

Boston’s Sloane & Walsh.Quoting from the Illinois

Appeals Court’s decision in Nabozny v. Barnhill,

the SJC wrote that “[v]igor-ous and active

participation in

Injured player can sue coach, school

Loss of overtime no basis for racial bias lawsuitSummary judgment granted to Amtrak

Negligence standard appliesoff field, judge determines



Linda J. Kline, Esq. • Sarah Wickham-Rothstein, Esq. • Neil J. Paterson, Esq. • Ann F. Ketchen, Esq.

ISTOCKPHOTO.COM

Defendant Boston College argued that it did not retaliate against one of its faculty members.

Ruling: college retaliated against bipolar professor

ISTOCKPHOTO.COMContinued on page 15

page 2 | New England IN-HOUSE | AUGUST 2015

Hearsay

Crime and punishment

Sony, Target and Home Depot are some of the household names asso-ciated with recent high-profile data breaches. But recent statistics striking-ly reveal that cybercrime is an equal opportunity threat.

The number of records compro-mised by data breaches grew from 93 million in 2012 to 1 billion in 2014, ac-cording to a recently released Foley & Lardner white paper on cybersecurity co-authored by Boston partner Mat-thew A. Karlyn. The white paper also reports that the annual cost of intellec-tual property theft has grown to an es-timated $538 billion globally.

But smaller scams also are on the rise. The FBI’s Internet Crime Com-plaint Center, which receives com-plaints from the general public on sus-pected Internet-facilitated crimes, re-ports more than $800 million in doc-umented losses from Internet crimes last year. The center logged 4,182 com-plaints with associated losses of $12.3 million from Massachusetts alone in 2014.

Nearly 30 percent of the total loss-es were due to business email com-promises, e.g. when criminals hack or spoof business executives’ email accounts and request that vendors, customers or other contacts send payments to fraudulent accounts. Twelve percent of the complaints re-ceived by the center had a social me-dia component.

“[T]he increased use of social me-dia has provided a quintessential gold-mine of personal data for perpetra-tors,” the center’s 2014 Internet Crime Report states. “More victims are sub-mitting complaints documenting how social media was utilized to perpetrate frauds, or indicating the perpetrator initiated a relationship through so-cial engineering.”

During a recent presentation at Ely-sium Digital, a Boston consulting firm that assists law firms in disputes

involving computer technology and electronic evidence, FBI Special Agent Carmine Nigro said that New England is a particularly “target-rich environ-ment.” The FBI’s Boston division (over-seeing Massachusetts, Maine, New Hampshire and Rhode Island) con-tains 600 cleared defense contractors, 200 colleges and universities, and a concentration of intellectual proper-ty-dependent industries such as bio-technology and pharmaceuticals, he said.

“Unfortunately, there is a lot here for our opponents to steal,” Nigro said. “It’s not just about protecting [Ray-theon’s] Patriot missile. … The rap-id growth of technology has increased the opportunities and methods for corporate espionage.”

Due to the sensitive information law firms possess from a variety of clients, Nigro said, the FBI is seeing a spike in firms being targeted, especially those that do work overseas.

As Nigro discussed some local cy-bercrime cases that resulted in pris-on sentences measuring six to 18 months, William S. Rogers Jr. of Bos-ton’s Prince, Lobel, Tye remarked that cybercrime penalties are “woefully in-adequate” to ensure deterrence.

Nigro said the FBI hopes to con-vince Congress to pass laws enhancing cybercrime penalties but that, in the meantime, educating employees on the threat and enacting countermeasures are the best defenses.

Cybersecurity spending already is near $70 billion a year and growing at roughly 10 to 15 percent annually, ac-cording to a recent RAND Corp. re-port. Based on its interviews with 18 chief information security officers, RAND predicts cybersecurity costs to increase 38 percent over the next 10 years.

“Most of the increase is accounted for not by the increase in the loss-es from cyberattacks,” RAND’s report states, “but from the cost of increas-ing the efforts to restrain the losses from cyberattacks.”

— Brandon Gee

DATA DRIVENThe sTory behind The numbers

Complaints received by FBI’s Internet Crime Complaint Center, 2014

Complaints Total loss

Massachusetts 4,182 $12,309,742 Connecticut 2,295 $11,478,793 New Hampshire 904 $3,025,825 Maine 726 $843,184 Rhode Island 582 $1,525,758 Vermont 382 $1,165,746

Source: 2014 Internet Crime Report and Internet Crime Complaint Center

Help yourself

The Supreme Judicial Court in Massachusetts has allowed Kamee B. Verdrag-er’s application for direct appellate review of the sum-mary judgment dismissal of her discrimination suit against Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, Chairman R. Robert Popeo and others.

The case will see the SJC address, for the first time, a matter involving the use of “self-help discovery.”

According to filings in the case, Verdrager — who joined Mintz Levin in 2004 — sued the Boston firm for gender discrimination in 2007 after she failed to make partner.

Verdrager previously told a Massachusetts Law-yers Weekly reporter that she rejected a $700,000 set-tlement offer in November 2008. She said she was in-formed a week later that she would be laid off in a move that the firm claims in fil-ings was in response to the slowing economy and ex-cess capacity.

At that point Verdrag-er confronted Mintz Levin partner Kim V. Marrkand with one of many docu-ments she had downloaded from the firm’s document library that she believed constituted “smoking gun” proof of her allegations. In its opposition to Verdrager’s SJC petition, Mintz Levin — represented by Choate, Hall & Stewart’s Joan A. Lukey — claims Verdrager also de-manded a seven-figure settlement at that time.

Outraged to learn Ver-drager had been harvest-ing — and sharing with her own lawyer — Mintz Levin documents that she believed supported her dis-crimination claims, Popeo ordered her immediate ter-mination and reported her to the Board of Bar Over-seers. The case now turns on the propriety of Verdrag-er’s conduct.

Verdrager argues that the documents came from the “public” section of the firm’s DeskSite library and that “firm policy informed users that they had no ex-pectation of privacy in the DeskSite system.” Lukey’s opposition counters that

Verdrager “proactively searched for, copied and transmitted to her lawyer privileged and confidential documents, many of which were irrel-evant to her claims.”

The BBO unani-mously cleared Ver-drager in 2012, con-cluding that “any experienced plain-tiff ’s lawyer would have advised [Ver-drager] to copy ev-erything she could get her hands on that was freely avail-able and pertinent to her claim. And that is all she did.”

SJC Justice Francis X. Spi-na affirmed the BBO rul-ing and noted that the court had never decided a case “involving the use of so-called self-help discovery.”

But back in Superi-or Court, where Verdrag-er’s discrimination lawsuit was pending, Judge Peter M. Lauriat granted Mintz Levin summary judgment in late 2013 after finding that the firm “has produced evidence to support its po-sition that [Verdrager’s de-motion] was based upon performance concerns,” not discrimination. Lauriat al-lowed counterclaims based on Verdrager’s document collection to proceed.

Verdrager, now repre-senting herself pro se, ar-gues that allowing the deci-sion to stand would weak-en Massachusetts’ unlawful discrimination statute by

giving employers li-cense to freely “ter-minate and prose-cute any employee who retains evidence or who shares it with an attorney, without fear of a viable retal-iation claim, by sim-ply claiming disloyal-ty and breach of con-tract (if restricted by an employer policy or agreement).”

She has the backing of the Massachusetts

Employment Law-yers Association.

“[A] plaintiff ’s non-de-ceptive use of employer

documents that are not genuine-ly confidential and do not affect third-party inter-ests should not be considered a le-gitimate, non-dis-criminatory rea-son for an adverse employment ac-tion,” Boston law-yers Ellen J. Mess-ing of Messing, Ru-davsky & Weliky and Courtney M.

Hostetler of Zalkind, Dun-can & Bernstein write in the association’s amicus brief. “Such an approach would go some distance toward leveling the playing field in employment discrimination cases, in which most infor-mation and documents of value are typically held by the employer.”

Noting that “[e]mbodied within the trust and con-fidence placed in an attor-ney are the duties to main-tain client confidentiality and not to misappropriate law firm property,” Lukey counters that Verdrager’s actions “were a betrayal of trust” that cannot insulate her from being fired.

The SJC allowed Verdrag-er’s application for direct appellate review June 26; oral arguments have not yet been scheduled.

— Brandon Gee

VERDRAGER

POPEO

AUGUST 2015 | New England IN-HOUSE | page 3

People in the Law

4

1

9

7

6

1 From left: Nicole Huang of RSA Security, Alex Aferiat of BT Americas and Sarah Kmieciak of Blatman Bobrowski

2 Michele McCormick of Liberty Mutual (left), Nora Marantz and Jack Hansen of Bentley CBE

3 Lawyers Weekly Publisher Susan Bocamazo (left) with Tanzina Chowdhury of Entegris

4 From left: Elizabeth Lazar of Morrison Mahoney; Katie Alexander and Brian Carroll, of Level Up; Rich Scott of OLB Inc.; and Kelly Huffman of Poseidon Water

5 From left: Holland & Knight’s James Smeallie, Lawyers Weekly Publisher Susan Bocamazo, Holland & Knight managing partner Steven Wright and Ben Stern, also of Holland & Knight

6 From left: Jack Hansen of Bentley CBE, Robert Ventura and Richard Yanofsky of Holland & Knight

7 Kelly Huffman from Poseidon Water (left), Katie Alexander of Level Up and Rich Scott of OLB Inc.

8 Holland & Knight’s Steven Wright pulls the name of a raffle winner with the assis-tance of Julie Duffy of the ACC’s Northeast chapter

9 Ryan Holt (left) and Scott Ziegler of Lawyers Weekly

The Northeast chapter of the Association of Corporate Counsel hosted a rooftop networking reception at law firm Holland & Knight’s Boston office on July 9.

2

3

5

For ACC, it’s summertime, an’ the livin’ is easy

8


By Eric T. Berkman An employer that failed to pay an em-

ployee for all accrued wages and unused vacation time on the date of his termina-tion, but paid everything in full before the employee filed a Massachusetts Wage Act lawsuit, was liable for treble damages only on foregone interest suffered as a result of the delay, a Superior Court judge has ruled.

Under the Wage Act, G.L.c. 149, §150, a terminated employee must be paid in full on the date of his termination or the em-ployer must pay treble damages, attorneys’ fees and costs. The Wage Act also states that the payment of wages after the employee has brought a complaint under the statute cannot serve as a defense for the employer.

The employee — who had filed a com-plaint letter with the Massachusetts Attor-ney General’s Office before receiving pay-ment in full — argued that the damages provision in the Wage Act entitled him to treble damages on the entire amount not immediately paid upon termination.

But Judge Thomas Drechsler disagreed.Relying on Dobin v. CIOview Corp.,

a 2003 Superior Court decision by Judge Ralph D. Gants, now chief justice of the Su-preme Judicial Court, Drechsler found that the provision barring post-complaint pay-ment as a defense means that an employ-er must pay treble damages on wages and benefits that are unpaid at the time a civil action is filed.

“’The corollary to this interpretation is that an employer is not required to pay tre-ble the lost wages and benefits if the wage and benefit payments were tardy but made before suit was brought,’” wrote Drechsler, quoting Dobin.

Meanwhile, the judge found that filing a complaint with the attorney general does not constitute a “bringing of the complaint” within the meaning of the Wage Act.

The eight-page decision is Littlefield v. Adcole Corporation, et al.

‘The lay of the land’Carole C. Cooke of Todd & Weld in Bos-

ton, who represented the employer, said the decision will be particularly helpful to small-er employers who are not well versed on the Wage Act, terminate someone, and — instead of giving the employee a check on the final day — pay the person during the regular pay-roll cycle.

“On the face of the statute, there’s been a violation, but what are the damages?” Cooke said. “There’s nothing from the Massachusetts Appeals Court or the SJC, but having anoth-er Superior Court case out there to go along with Dobin and [the U.S. District Court’s de-cision earlier this year in Clermont v. Mon-ster Worldwide, Inc.] will be helpful for prac-titioners to understand the lay of the land.”

Evan M. Fray-Witzer, a management-side employment lawyer in Boston, said that even with Drechsler’s mitigation of damages in the case, it still provides a cautionary tale of what can go wrong when an employer does not make payment in full on the date of a work-er’s termination.

“Even here, the employee was awarded his attorneys’ fees and, had he been slightly faster to file in court, he would have recovered tre-ble damages on all of the wages owed, even though the delay in payment was just by a couple of weeks,” he said. “It’s why we tell em-ployers all the time, ‘Just cut the check.’”

Fray-Witzer said the holding in Littlefield makes that advice even more prudent since the decision will encourage “rushing the

courthouse doors” by plaintiffs’ attorneys the moment an employee is terminated if an em-ployer fails to pay everything that is due on the date of termination.

Plaintiff ’s counsel David J. Gallagher of Regnante, Sterio & Osborne in Boston could not be reached for comment prior to deadline. But Alan D. Meyerson of Boston, who rep-resents employees in Wage Act claims, said Littlefield gives both the plaintiffs’ and de-fense bar predictability as to the consequenc-es of their actions pre-suit.

At the same time, he said he would love to see this particular issue taken up on ap-peal, especially since the security deposit stat-ute provides for multiple damages to tenants when a landlord fails to return a security de-posit in a timely manner. That is based on the

entire amount payable, presumably even if the landlord pays in full before the tenant files a lawsuit.

“The law should be consistent and har-monious across the board — whether you’re talking about … wages or security deposits,” he said. “I’ve always wanted to argue that, but this case will be another nail in the coffin, and I do feel it is probably a correct statement of the law.”

Late paymentOn Aug. 27, 2014, plaintiff Kenneth E. Lit-

tlefield, director of human resources for the defendant, Adcole Corp., learned he was to be terminated on a date to be determined. In Oc-tober, the company informed him that his last day would be Nov. 12, 2014.

At the time, Littlefield had accrued 522 hours of unused vacation time, for which he

was to be paid upon termination per compa-ny policy.

The company also owed him wages from Nov. 2 through Nov. 15. In total, Adcole al-legedly owed Littlefield about $33,600 as of his termination date.

Rather than providing an immediate check for that amount, the company apparently put the amounts through normal payroll process-ing, which resulted in the issuance of two sep-arate checks for wages received by Littlefield, one eight days after his firing and a check for unused vacation time received two weeks late.

On Nov. 18, 2014, while Adcole was in the middle of processing the payments, Little-field registered a complaint with the Attorney General’s Office alleging a Wage Act violation based on the defendant’s apparent failure to fully compensate him with all monies owed on the date of his termination. He received a right-to-sue letter three days later.

Five weeks later, Littlefield sued Adcole in Superior Court seeking treble damages and attorneys’ fees under the Wage Act.

Multiple damagesDrechsler rejected Littlefield’s argument

that he was entitled to treble damages on the entire amount that was unpaid as of his termination date.

The judge noted that Gants faced a near-ly identical issue in Dobin. In that case, the plaintiff was fired by her employer and was given a series of checks that constitut-ed payment in full of the wages it owed her, but it backdated the checks two days after her termination date. That resulted in a sit-uation in which, as in Littlefield, an em-ployee was paid late but before the filing of a complaint.

As Gants pointed out in Dobin, “When wages and benefits are tardy but paid be-fore the complaint was brought, the loss of wages and other benefits is simply the in-terest foregone from the delay in payment, which would be trebled under the Act.”

Under such an interpretation, tardy pre-complaint payment does not technical-ly constitute a defense to the Wage Act vio-lation, but mitigates the amount of damag-es, Gants said in his 2003 decision.

“As the only existing authority on the is-sue in the Commonwealth — while not controlling — Dobin is instructive and indeed persuasive,” Drechsler said. “The minor factual distinctions between this case and Dobin do not change the court’s

opinion on the issue.”Drechsler also pointed to Clermont, de-

cided in April by a U.S. District Court judge who characterized tardy wages paid before the bringing of a complaint as not being lost wages within the meaning of the Wage Act.

Littlefield also failed to persuade the judge that the complaint he filed with the attorney general constituted a “bringing of the com-plaint” within the meaning of the Wage Act.

“This court finds that the ‘bringing of the complaint’ refers to the commencement of a civil action,” Drechsler said. “Moreover, both Dobin and Clermont reference the fact that the defendants in those cases paid the full amount due prior to receiving no-tice of the filing of the complaint. This im-plies a need for notice to be provided to the defendants, which is not achieved by simply filing a complaint form with the Attorney General without notice to the defendants.”

Accordingly, the judge concluded, Little-field was entitled to reasonable attorneys’ fees, litigation costs and foregone interest as a result of the payment delay.

Publisher

Susan A. Bocamazo, Esq. [email protected]

Content Editor Brandon Gee

[email protected]____________________________

Designer James Needham

____________________________

Advertising Director

Scott Ziegler____________________________

Account ExecutivesMelanie Footer

Joan McGonagle Kelsey Karimi Elaine Fanning

____________________________

You can view New England In-House online at newenglandinhouse.com.

For editorial, call 800-444-5297, Ext. 12192,

and for advertising, call 800-444-5297, Ext. 12211.

New England In-House is published quarterly by The Dolan Company.

POSTMASTER: Electronic Service Requested.

Send address changes to New England In-House, 10 Milk St. 10th Floor, Boston, MA 02108-4649.

Copyright 2014 The Dolan Company. Material published in New England In-House is compiled at substantial

expense and is for the sole and exclusive use of purchasers and

subscribers. The material may not be republished, resold, recorded, or used in any manner, in whole or in

part, without the publisher’s explicit consent. Any infringement will be

subject to legal redress.








By Thomas E. Egan














WIKIPEDIA COMMONS

ISTOCK


By Eric T. Berkman
















Treble damages limited to interest in Wage Act suitAccrued wages, vacation paid before case brought

ISTOCKPHOTO.COM

The judge found that fil-ing a complaint with the attorney general does not constitute a “bring-ing of the complaint” within the meaning of the Wage Act.

mailto:[email protected]



By Brandon GeeAfter gaining momentum in recent

years during the administration of former Gov. Deval L. Patrick, noncompete reform in Massachusetts appears to have been back-burnered.

With an advocate in the Corner Office — Patrick went as far as to support a Cal-ifornia-style outright ban on noncompe-tition agreements — a compromise mea-sure that would have placed limits on the duration, geographic reach and other fea-tures of noncompetes passed the state Sen-ate last summer before being dropped from the economic development bill negotiated with the House.

This summer, none of the six noncom-pete-reform bills pending in the Legislature have made it to even a committee hearing.

Supporters remain cautiously optimistic, but fear the prospects for reform have di-minished under Gov. Charlie Baker.

The new governor has said little on the subject aside from comments at a pre-elec-tion debate in Springfield, when he stated his belief that the two sides — entrepre-neurs who argue that noncompetes stifle the innovation economy, and big business-es that counter they are necessary to pro-tect trade secrets and other interests — ac-tually were not that far apart on issues such as what sort of work and workers should be subject to the agreements and how long they should last.

“This is sort of the last mile problem,” Baker said at the September debate, ac-cording to State House News Service. “This is an issue we should resolve. It’s creating a lot of friction across the technology com-munity across Massachusetts.”

Since staking out that middle-of-the-road stance, however, many lawyers say Baker’s actions suggest he is more aligned with those who oppose reforming restric-tive covenants.

In December, Baker appointed Woburn lawyer Andrew P. Botti, an outspoken op-ponent of noncompete reform, to his tran-sition team subcommittee on jobs and the economy. And in April, Baker named Paul T. Dacier chairman of his Judicial Nomi-nating Commission.

Dacier is executive vice president and

general counsel of Hopkinton-based EMC Corp., which has developed a reputation for being one of Massachusetts’ most pro-lific and ardent enforcers of restrictive cov-enants by frequently filing lawsuits against former employees in the Superior Court’s Business Litigation Session, among oth-er venues.

“I don’t think he chose Paul Dacier be-cause he’s with EMC, and he’s opposed to noncompete reform, and he’s with a com-pany that’s a serial filer of noncompete cas-es,” said John R. Bauer, a business litigator in at Boston. “But it still sends a message that the governor is not in favor of noncom-pete reform, isn’t likely to push noncom-pete reform in the Legislature, and is likely not to support noncompete reform if [law-makers] ever got around to passing some-thing, which isn’t likely.”

Dacier declined to comment, but Bak-er’s chief legal counsel, Lon F. Povich, said the decision to tap Dacier for JNC chair-man “was in no way related to any posi-tion that EMC may or may not have taken in any case.”

Povich said Dacier was appointed to the post because of his commitment to the courts “and because the governor believes he will do an outstanding job in that role.”

One of Beacon Hill’s biggest proponents of noncompete reform, Rep. Lori A. Eh-rlich, D-Marblehead, said Baker’s appoint-ment of Dacier “is certainly a concern,” but it would be premature to assume the gover-nor is wholly opposed to placing limits on the agreements.

Ehrlich attributed inaction on the pend-ing bills she and others filed to squabbling between the state House and Senate over committee rules and compositions, not a lack of support from the Governor’s Office.

Given Baker’s business background, Ehrlich said she hopes the governor will be open to reform in response to the “chilling effect” of noncompetes across the workforce.

“I have learned not to presume where Gov. Baker stands on matters of policy as some of his positions don’t fall along ex-pected party lines,” Ehrlich said. “I had a very brief conversation with him during the campaign and look forward to fu-ture discussions.”

Mark A. Whitney, a management-side attorney at Boston’s Morgan, Brown & Joy, cautioned against reading too much into Baker’s appointment of Dacier, but did note there has been far less “buzz” about non-compete reform this year than in the past.

“There’s not much intel on how Gov. Bak-er views [noncompetes],” Whitney said. “I guess it is relatively quiet compared to last year and the year before, which may be tell-ing in and of itself. It usually gets hot right about now.”

According to Botti, noncompete reform was not even part of the conversation when Baker chose him for the transition team. He added that the governor simply has had more pressing issues to contend with, such as the state budget and the MBTA’s poor performance record over the past winter.

“Gov. Baker has demonstrated that he’s an open-minded individual and that he’s will-ing to listen to all sides and do what a good leader does, which is make the ultimate decision,” said Botti, a lawyer at McLane, Graf, Raulerson & Middleton. “But [non-compete reform] doesn’t impress me as be-ing a front-burner issue at the moment.”

Both Bauer, a reform proponent, and Whitney, who generally supports noncom-petes but would not be opposed to legis-lation targeting abuses, said fellow law-yers should not expect any changes to the law in the near future beyond incremental

developments in caselaw.But regardless of the prospects, Bauer

said reform-minded attorneys and their clients should continue to push the issue in hopes of building broad-based support for reform. Then, perhaps, they can gain trac-tion in the Legislature without vocal advo-cacy from the executive branch, the Birn-baum & Godkin lawyer said.

“The Chamber of Commerce is an active opponent of noncompete reform; there’s

no balance on the other side,” Bauer said. “If you take the thousands of employees in Massachusetts bound by noncompete agreements, there’s no network binding those people together so they’re any sort of force in the Legislature. The employees who sign these noncompetes and have to live with them and are prevented from moving up and moving on — they’re not organized, and legislatures generally don’t respond to unorganized interests.”

Noncompete reform in Massachusetts loses traction

AP PHOTO

Paul T. Dacier heads EMC Corp., which has a reputation for being a prolific and ardent enforcer of restrictive covenants.

Pioneers in the field of Executive Advocacy

Providing strategic guidance and legal representation for over three decades

to executives, professionals, principals and corporate officers regarding

their individual rights and obligations

Shilepsky Hartley Michon Robb’s attorneys have been recognized as leaders in their field by the College of Laborand Employment Lawyers, Chambers USA, Super Lawyers®,Best Lawyers In America© and Martindale-Hubbell.

Nancy S.Shilepsky

H. JamesHartley

Katherine J.Michon

Barbara A.Robb

Brian J.MacDonough

Shilepsky Hartley Michon Robb LLP | www.shilepsky.com | 617.723.8000

The space you purchased has been reserved and the above copy must be approved by Wednes-

day at 3pm. The ad will run as shown unless we are notified of changes.

I approve the above ad to appear in Lawyers Weekly on ______________________________

according to their stated terms and conditions at a rate of $ __________________________

Client signature: ________________________________________________________

Please sign and return a copy of this ad by Wednesday 3pm.FAX (617) 451-7326

Lawyers Weekly Advertising

Ad Rep: Melanie

Client: Shilepsky

Size/Section: NEIH 2x7.917

Date: 022315

DESIGN vw

One of Massachusetts’ biggest proponents of noncompete reform, Rep. Lori A. Ehrlich, D-Marblehead, said the appointment of Paul Dacier “is certainly a concern,” but it would be premature to assume the governor is wholly opposed to placing lim-its on the agreements.

http://www.shilepsky.com


By Eric T. Berkman A defendant in a patent infringement case

had to produce all communications relat-ing to the non-infringement legal opinion it claimed it received, a federal judge in Massa-chusetts has ruled.

One of the defendant’s employees had dis-closed during a deposition that the compa-ny had sought a legal opinion from its attor-neys as to whether its products may have in-fringed on the plaintiff ’s patent.

The employee of defendant Epistar Corp., which makes LED products, stated that Epistar had sought legal advice after co-de-fendant Everlight Electronics Co. informed it of infringement concerns relating to par-ticular products. The employee also stated that Epistar had prepared an analysis of the products for its law firm, which, according to the defendant, provided an oral opinion of non-infringement. The employee provid-ed that testimony after a brief break in the deposition to consult with counsel.

A U.S. magistrate judge had previously de-nied a motion by the plaintiff, Boston Uni-versity, to compel communications relat-ed to the opinion and the product analysis, finding that the employee’s disclosures were too general to constitute a waiver of the at-torney-client privilege.

But U.S. District Court Judge Patti B. Sa-ris reversed, holding that Epistar waived the privilege by disclosing significantly more than its law firm’s bare conclusion on the in-fringement issue.

Saris found that the employee chose to disclose information about Epistar’s com-munications with its law firm — Finneg-an, Henderson, Farabow, Garrett & Dunner

— in a deposition, in the presence of a Fin-negan attorney, and after speaking to a Fin-negan attorney about whether the questions implicated privilege.

“All of these circumstances indicate that Epistar did not intend to keep these commu-nications private. … For these reasons, log-ic and fairness dictate that Epistar waived its attorney-client privilege,” Saris wrote.

At the same time, however, Saris limit-ed her order to communications relating to the non-infringement opinion, rejecting the plaintiff ’s demand that Epistar produce all attorney-client communications regarding the patent in question.

The 16-page decision is Trustees of Bos-ton University v. Everlight Electronics Co., Ltd., et al.

Drawing the linePlaintiff ’s counsel Michael W. Shore of

Shore, Chan, DePumpo in Dallas said the decision sends a strong message that a par-ty cannot disclose the content of an attor-ney-client communication in order to gain an advantage without suffering consequences.

By disclosing what it did during the depo-sition, the defendant was trying to create an impression that it was acting on a legal opin-ion and acting reasonably, Shore said.

“They were trying to create that impres-sion in a strong enough way to influence the decision-makers in the case but not strong enough to make a waiver [of the attorney-cli-ent privilege],” he said. “But they get sloppy and went over the line. … If you’re going to play that game on an attorney-client privi-lege to create an advantage, you’d better be careful about where that line exists.”

Shore also suggested that the

communications in question must be dam-aging to Epistar, given that while his client’s appeal of the magistrate judge’s ruling was still pending, Epistar confirmed it would not assert an “advice-of-counsel” defense, which would have required a broad disclosure of otherwise privileged communications.

Shore said he does not believe Finnegan Henderson gave a non-infringement opin-ion. He also noted that Epistar claimed the opinion was oral, not written.

“I think we’ll see something very different than what they represented in the deposi-tion. To give a non-infringement opinion [in this case], an attorney would have to be com-pletely incompetent, and I don’t think they are. So we’ll see what actually occurred.”

Sean T. Carnathan, who handles complex civil litigation at O’Connor, Carnathan & Mack in Burlington, said the ruling provides an important practical lesson: If you assert advice-of-counsel as a defense at a deposi-tion, make sure you really mean it.

“The magistrate’s decision was quite for-giving [and] would have allowed Epistar to put the horse back in the barn, so to speak,” Carnathan said. “Judge Saris essentially ruled that once you let the horse out of the barn, it stays out.”

Even then, Saris’ ruling limiting the scope of the waiver to communications related to the seeking of the legal opinion was perhaps more favorable to Epistar than one might have expected given the testimony at the deposition,” Carnathan said.

Christopher S. Schultz, a partner in Fin-negan Henderson’s Boston office, represent-ed Epistar. He could not be reached for com-ment prior to deadline. But David A. Bar-ry, a Boston trial attorney who handles pat-ent-infringement cases, said he found the ruling surprising.

“The defendant’s employee merely dis-closed the fact that it had sought an infringe-ment opinion from the lawyer by provid-ing him with an ‘analysis’ of the challenged product, without disclosing the analysis it-self or anything of substance about the prod-uct,” said Barry, who practices at Sugarman, Rogers, Barshak & Cohen.

And though Epistar did initially rely on an advice-of-counsel defense, once the defen-dant abandoned the defense, the court could have — and should have — allowed Epistar to revoke any prior waiver and thus main-tain the confidentiality of its communica-tions with counsel, Barry said.

“Once the defendant was no longer relying on the advice-of-counsel defense, what le-gitimate discovery purpose would be served by declaring a waiver of the attorney-client privilege and by giving the plaintiff free ac-cess to the lawyer’s opinion?” Barry asked.

Deposition disclosuresThe plaintiff, trustees of Boston Univer-

sity, sued defendant Epistar in U.S. District Court alleging that Epistar infringed on its patent, U.S. Patent No. 5,686,738 (the ’738 patent), for a type of gallium nitride film used in light-emitting diodes.

In the process of discovery, BU deposed Epistar’s director of intellectual proper-ty, Meng-Chun Kuo, who was represent-ed at deposition by a Finnegan Hender-son attorney.

During the deposition, Kuo testified that Epistar had been relying on an opinion from counsel in order to avoid a finding of will-ful infringement; she then asked to speak with her attorney in private to determine whether she was testifying about privi-leged information.

After speaking with the attorney, Kuo admitted that Epistar had sought an opin-ion from Finnegan Henderson in 2007 after co-defendant Everlight warned that Epistar

products might be infringing on the ’738 patent. Kuo also stated that Epistar had pre-pared a report of its products that it gave to the law firm, which then told Epistar in an oral opinion that its products did not in-fringe on the patent.

In response to further questioning by BU’s at-torneys, Kuo confirmed that when she said “no in-fringement,” she was refer-ring to non-infringement of the ’738 patent by the particular products at is-sue, based on analysis pro-vided by the attorneys.

Kuo further confirmed that the 2007 prod-uct analysis still existed, though she was not sure where the file was stored.

BU moved to compel production of all documents and communications related to any oral or written opinions by Finneg-an Henderson to Epistar regarding the ’738 patent. The magistrate judge denied the mo-tion, finding that Kuo merely revealed the existence of Finnegan Henderson’s infringe-ment opinion and that when Kuo disclosed Finnegan’s legal conclusion, Epistar did not reveal the “content” of any attorney-client communications, such as what Epistar may have told its attorneys or the reasoning be-hind Finnegan’s conclusion.

The magistrate judge also ordered Epistar to decide whether it would be asserting an advice-of-counsel defense in response to the infringement charge. Epistar subsequent-ly indicated that it would not be relying on such a defense.

Meanwhile, BU appealed the magistrate judge’s denial of its motion to compel.

Waiver of privilegeSaris found that Epistar had, in fact,

waived the attorney-client privilege during Kuo’s deposition.

While courts are split on whether dis-closure of a bare legal conclusion about in-fringement constitutes a waiver, Kuo’s dis-closures in the case — including the circum-stances under which Epistar consulted with Finnegan Henderson and the fact that Epis-tar had prepared a product analysis — went far beyond that point, the judge said.

“At the very least, Epistar waived its privi-lege over the analysis report that it prepared and gave to Finnegan, which was the basis of the legal opinion,” Saris said.

Meanwhile, she said, the circumstances surrounding Kuo’s disclosures indicated a deliberate waiving of confidentiality regard-ing Finnegan Henderson’s non-infringement opinion. Specifically, Kuo agreed to answer questions on that topic after a break to dis-cuss with counsel whether such questions involved privileged information.

“[A]t no time did Kuo or her Finnegan at-torney assert attorney-client privilege,” Saris said, adding that “logic and fairness” dictate a finding that the privilege was waived.

Nonetheless, Saris found no fairness con-cerns that would require broader discov-ery of all communications relating to the ’738 patent.

“In particular, Epistar has recently decid-ed not to make communications with Fin-negan an issue in this case,” the judge said. “Nor is it trying to benefit from the disclo-sure by, for example, using it as part of an advice-of-counsel defense.”

Accordingly, Saris concluded that Epis-tar would merely be compelled to disclose all attorney-client communications relating to the non-infringement opinion Finnegan Henderson provided in 2007.

Law firm’s opinion subject to discovery in patent case

SARISReverses

decision of magistrate judge

Lawyers Weekly AdvertisingAd Rep:

Client:

Size/Section: 1/4 V

Date:

The space you purchased has been reserved and the above copy must be approved by Wednesday at 3pm. The ad will run as shown unless we are notified of changes.

Client signature: _______________________________________Please sign and return a copy of this ad by Wednesday 3pm.FAX (617) 451-7326

I approve the above ad to appear in Lawyers Weekly on ______________according to their stated terms and conditions at a rate of $____________

The Have Never Been HigherRisks

Licata Risk & Insurance Advisors, Inc. 137 South Street, Second Floor, Boston, MA 02111-2848 617.451.2140 www.LicataRisk.com Mail to: PO Box 52558, Boston, MA 02205-2558

Risk and Insurance Management

Insurance Audits • Competitive Bids • Risk Management

Reduce Insurance Costs

Broaden Coverage

Protect Directors & Officers

Minimize Risk, Litigation, Liability & Loss

Increase Financial Valuation

Licata Risk is not an insurance company. We are not brokers and do not sell insurance.

As a pure risk advisor, we work directly for CFOs and Chief Executives of mid-market companies. Having only your best interest in mind, we focus on managing your risk, allowing you to focus on running your business with confidence knowing that you are protected. We help our clients gain the competitive advantage they need in today’s unpredictable and litigious market.

Contact Brent Trethewey at [email protected] or 617.312.7289 about a risk assessment for your business so you can know for sure that you are protected.

How do you know for sure that you are protected?

Ad - CFO.indd 1 8/30/13 5:02 PM






Broaden Coverage








Ad - CFO.indd 1 8/30/13 5:02 PM






Broaden Coverage








Ad - CFO.indd 1 8/30/13 5:02 PM


As a pure risk advisor, we work directly for CFOs and Chief Executives of midmarket companies. Having only your best interest in mind, we focus on managing your risk, allowing you to focus on running your business with confidence knowing that you are protected.

You love your insurance broker… but you love your company more.

Licata Risk & Insurance Advisors, Inc. • www.LicataRisk.com


u Reduce Insurance Costs

u Broaden Coverage

u Protect Directors & Officers

u Minimize Risk, Litigation, Liability & Loss

u Place Insurance Brokers in Competition

Contact Brent Trethewey at [email protected] or 617.312.7289


http://www.LicataRisk.com






By Thomas E. EganA community college employee could

not file a late challenge to her termination despite the fact that she was not notified of her rights until after the 30-day appeal pe-riod had expired, a Superior Court judge in Rhode Island has found.

The petitioner employee argued that the 30-day period was not triggered until she received delayed notice of her right to file an administrative appeal with the Person-nel Appeal Board, or the PAB, of the De-partment of Administration.

Judge William E. Carnes Jr. disagreed.“It is troubling to this Court that by the

time [the petitioner] received the Termi-nation Action form, which included no-tice of her right to appeal, the thirty-day appeal period that commenced upon the mailing of her termination letter had end-ed,” Carnes wrote. “However, there is no re-quirement that notice of the appeal be in-cluded with notice of termination.”

The 12-page decision is Watters v. De-partment of Administration, Personnel Appeal Board, et al.

Cranston attorney V. Edward Formisano represented the employee. He was opposed by Jeffrey S. Michaelson of North Kings-town, Providence lawyers George H. Rinal-di and Michael R. McElroy, and Warwick’s Ronald A. Cavallaro.

Firing and aftermathThe petitioner, Robin J. Watters, began

working for the respondent Communi-ty College of Rhode Island in August 2010 as a temporary employee. In May 2013, she became a full-time senior teller at CCRI’s

Providence campus.In a letter dated Oct. 16, 2013, CCRI’s di-

rector of human resources, Sheri L. Norton, informed the petitioner in writing that her employment with CCRI was terminated ef-fective Nov. 1, 2013. The reason given for the termination was a purported failure to prop-erly handle and safeguard cash deposits.

The termination letter explained that the petitioner would remain on administra-tive leave with pay until the date of her ter-mination. She was told to contact HR with any questions.

Additionally, the petitioner was informed that she could contact her union representa-tive. The termination letter made no men-tion of her right to appeal the termination to the PAB.

On Dec. 9, 2013, the petitioner received her termination action form, also known as a “CS-5.” The form notified the petitioner of her right to appeal to the PAB within 30 days.

The petitioner filed an appeal of her termi-nation to the PAB on Jan. 7, 2014, which fell within 30 days of the mailing of the termina-tion action form.

The PAB determined that the petitioner’s appeal was untimely filed, finding that she received notice of her termination via the Oct. 16, 2013, termination letter and that the 30-day appeal period began running from that date.

Mandatory deferenceThe petitioner argued that it was the

mailing of the termination action form that triggered the running of the 30-day appeal period, which would mean that her Jan. 7, 2014, appeal to the PAB was timely.

“Ms. Watters was unable, after being

given an opportunity, to provide the PAB with any statutory language indicating that the notice of the right to appeal must be included with the notice of termination,” Carnes said.

The judge found not only is there no lan-guage in G.L. §36-4-42 requiring an em-ployer such as CCRI to ensure that notice of the right to appeal is included with notice of the termination, but it is “a well-estab-lished principle that knowledge of the law is assumed.”

Norton, the HR director, explained that the termination action form is not sent out at the same time as the termination letter because it cannot be completed until bal-ances — including for vacation leave and retirement — are calculated by payroll.

Norton testified that the termination ac-tion form “is used ... for the purposes of any refunds and payroll issues,” and that such forms “are also processed subsequent to the termination letter.”

Thus, “while the inclusion of the ap-peal language in the Termination Action form may be confusing, CCRI successful-ly argued that it was the October 16, 2013

termination letter that constituted notice of Ms. Watters’ termination, and this Court cannot find that such determination was an abuse of discretion or in violation of stat-utory provisions on the part of the PAB,” Carnes stated.

Though the judge acknowledged that he might have decided the matter different-ly than the PAB, he said “deference to an agency interpreting its governing statute is mandatory when this Court reviews an agency’s decision.”

Although “Ms. Watters’ situation and the timing of the notice of appeal are concern-ing, our Supreme Court has held it to be re-versible error when a trial justice finds that ‘the administrative agency did not err in any way,’ but then chooses to vacate the de-cision based upon ‘inherent equitable au-thority,’” he noted.

Carnes said the PAB “wrestled” with the matter of when the appeal period started running and considered all the evidence and testimony before it.

“Its decision was not an abuse of discre-tion and must be upheld,” he concluded.

CCRI worker’s appeal of termination found to be untimely

The petitioner was terminated from her job as a senior teller at the respondent Community College of Rhode Island.

www.seyfarth.com

The difference is clearSeyfarth Shaw LLP is leading the legal industry by delivering the highest quality legal services, efficiently and transparently.

Seyfarth Boston:• Top-ranked Massachusetts Employment Group

by Chambers USA for 10 consecutive years

• 8 Massachusetts employment lawyers recognized by Chambers USA

• Largest Management Employment practice in Massachusetts

• Largest Business Immigration practice on the East Coast

• 24 New England Super Lawyers in 2015

• Massachusetts Lawyers of the Year in Management Employment & Labor Law - 2010 to present

Our Firm:• 2015 Labor & Employment Team of the Year

—Chambers USA

• BTI Client Service A-Team 2015 —BTI Consulting

• Complex Employment Litigation Powerhouse 2015 —BTI Consulting

• Employment Practice Group of the Year 2015 —Law360

• Innovative Law Firm of the Year 2014 —Financial Times

• Go-To Law Firm for Top 500 Companies 2014 —American Lawyer Media

©2015 Seyfarth Shaw LLP #15-2843 R4

http://www.seyfarth.com


By Kris Olson

An insurance carrier that challenged a $500,000 jury verdict did not commit unfair claims settlement practices when it stopped short of extending a formal of-fer to resolve the case, a Superior Court judge in Massachusetts has ruled.

The plaintiff, who was injured in a barroom scuffle, argued that the insur-er violated G.L.c. 176D, §3(9)(f) “when it failed to effectuate a prompt, fair and equitable settlement of her tort claim de-spite the fact that liability had become reasonably clear.”

The defendant insurer’s first formal of-fer — $500,000 plus post-judgment in-terest — came on July 16, 2010, more than five months after the verdict was rendered. The defendant contended that it had not offered a pre-trial settlement on the advice of its “experienced and skilled” counsel, who also advised it to adopt a “two-track” approach of pursuing an appeal and settlement simultaneously.

Judge Edward J. McDonough Jr. found that the defendant had done enough to dodge Chapter 176D liability.

“In sum, [the defendant] acted in good faith to advance rather than derail the settlement process,” McDonough wrote, crediting the insurance company’s “per-sistence and flexibility” with ultimately yielding a partial settlement.

The 53-page decision is Graf v. Hospi-tality Mutual Insurance Company.

‘Rhodes’ paved the wayBoston lawyer James E. Harvey Jr. of

O’Malley & Harvey defended Hospitality Mutual Insurance Co. against the Chap-ter 176D claim. A contrary finding by the judge would have chilled insurance com-panies from pursuing non-frivolous ap-peals, he said.

“If you would violate 93A when you take an appeal, you really don’t have a right to appeal,” Harvey said.

Opinions on whether the case was de-cided correctly hinged on whether Chap-ter 176D should be read as strictly re-quiring the extension of a formal offer or whether, as the judge found, the “func-tional equivalent” will suffice.

Mark J. Albano of Springfield, Massa-chusetts, who represented the plaintiff, said lawyers should be troubled by the way McDonough “filled in the gap” here.

“It would appear that by recognizing an exception to the rule that requires a tender of an offer of settlement when li-ability becomes clear, the court is creat-ing uncertainty and controversy when it comes to an insurer’s obligations, which after Rhodes were quite clear,” Albano said, referring to the Supreme Judicial Court’s 2012 ruling in Rhodes, et al. v. AIG Domestic Claims.

Rhodes established that plaintiffs’ double or treble damages for a post-judg-ment violation of G.L.c. 93A or 176D “must be based on the underlying judg-ment in the plaintiffs’ tort action,” rather than a calculation of the cost of the “loss of use” of the late-tendered settlement (essentially, the interest that would have been earned on the settlement).

The plaintiffs in Rhodes were award-ed $22 million in damages under G.L.c. 93A on top of the $11.3 million judgment they had obtained on their tort claim.

Boston’s John P. Ryan, the Sloane & Walsh lawyer who argued for the de-fense in the Rhodes appeal, was retained post-verdict by the defendant insurer in Graf. Ryan noted a “disturbing trend” of Chapter 176D being invoked where, as in Graf, liability is not “reasonably clear” or there are substantial appellate or collat-eral issues.

“My concern would be that the ex-treme factual record of Rhodes may be being misconstrued and applied to more conventional disputes,” he said, noting

that liability was not in doubt in Rhodes.Boston lawyer Thomas F. Maffei agreed

that Graf was more “conventional” and thus correctly decided.

“The extensive law under 176D boils down to this: ‘If there are two sides to the story and both are reasonable, there is no violation,’” the Sherin & Lodgen law-yer said.

Unlike in Rhodes, there were sever-al good-faith disputes in Graf, from the “credibility contest” at the heart of the trial to a judge’s evidentiary ruling, to the limits of coverage under the defen-dant insurer’s policy, to whether the in-surer would have to foot the bill for an attachment that the plaintiff would ob-tain against the liquor license held by its insured.

Ryan said he hoped the judge’s detailed decision would “function somewhat as a counterweight” against the prolifera-tion of 93A and 176D claims, which he said are “time-consuming, expensive and not consistent with the goal of fairly and justly adjudicating civil disputes.”

Albano, meanwhile, said he worried about an insurer extending the “func-tional equivalent” of a settlement offer, a plaintiff ’s attorney indicating a will-ingness to accept it, and then the insur-er never extending it formally, leaving the plaintiff without recourse under 93A and 176D.

Margaret M. Pinkham of Pinkham Busny in Woburn, Massachusetts, who represented the plaintiffs in Rhodes, shared Albano’s dismay in the ruling.

“A claimant has no ability to accept an offer unless and until it is made,” she said.

While Judge McDonough said his con-clusion that the plaintiff would have re-jected the insurer’s offer was “not a nec-essary basis” for his decision, Pinkham puzzled over why he felt the need to dis-cuss the matter at all, noting that, “as was reiterated in Rhodes, the issue of whether a plaintiff would accept or re-ject an offer is irrelevant to the Chapter

176D analysis.”Boston attorney Leonard H. Kesten

said that while he had never seen a judge find the “functional equivalent” of an of-fer, the “universe of facts” supported Mc-Donough’s opinion in Graf.

The insurer, through its counsel, made clear repeatedly that the plaintiff “could have had $500,000 anytime she wanted,” Kesten said. If she indicated a willing-ness to accept that amount and the offer was never formally extended, “then you have a case,” he added.

Two-track strategyPlaintiff Katie Graf alleged that she

suffered a severe ankle injury when a doorman at the Fat Cat Bar and Grill in Springfield picked her up and threw her while trying to “quell a disturbance” at the establishment.

The doorman claimed he never touched Graf and was physically incapa-ble of throwing her. Meanwhile, the Fat Cat’s manager said she saw Graf knocked over before the doorman even arrived on the scene.

The trial turned when the plaintiff, over the defense’s objection, was allowed to testify that she had asked the Fat Cat staff to call an ambulance and that its failure to do so showed Fat Cat’s “con-sciousness of liability.”

Fat Cat’s manager maintained that it was Graf who refused an ambulance. Ac-cording to the manager, Springfield po-lice told her there was nothing she could do if an injured patron declined to have an ambulance called.

When defense counsel tried to get those statements admitted under the state-of-minad exception to the hearsay rule, counsel for the plaintiff successful-ly objected.

In her post-trial motion seeking judg-ment notwithstanding the verdict, de-fense counsel contended that Massachu-setts case law clearly gave the defendant “an unqualified right to negate the infer-ence of consciousness of guilt by explain-ing to the jury why he took the action in question.”

But McDonough was not convinced.The defense proceeded to adopt a

“two-track strategy” of pursuing appeal and settlement simultaneously.

The insurer’s initial “overture of set-tlement” was made on March 5, a little over a month post-verdict. The defen-dant proposed mediation or settling the case for what it believed were the limits of its policy: $500,000 plus post-judg-ment interest.

Carrier’s post-verdict challenge did not violate statuteInsurance co. made ‘functional equivalent’ of settlement offer


“If you would violate 93A when you take

an appeal, you really don’t have a right to appeal.”

— James E. Harvey Jr.








By Thomas E. Egan














WIKIPEDIA COMMONS

ISTOCK


By Eric T. Berkman
















Don’t miss the latest news.

Sign up for weekly email alerts for in-house counsel at

newenglandinhouse.com


On any given workday, we all deal with a wide spectrum of human behavior. At one time or another, we have all been on the giv-ing and receiving ends of idiosyncratic — even uncomfortable — workplace conduct.

A recent trend could create legal liability for such discourteous conduct in the work-place. In one instance, an influential legal organization has proposed amending the tort of battery to allow “unusually sensitive” workers to file suit when they find a partic-ular type of contact to be offensive.

In another, several states are considering legislation that would make it unlawful to “bully” in the workplace.

The establishment of these novel ar-eas of liability, while perhaps well-inten-tioned, will create a hornet’s nest for em-ployers attempting to successfully manage their workforce.

‘Unusually sensitive’ employeeOn May 20, the American Law Institute

voted by a narrow margin to implement a significant change to its Restatement of the Law of Torts regarding the definition of “offensive contact” required for the tort of battery.

While the law traditionally required that a contact that causes no bodily harm must be offensive to a “reasonable” person’s sense of personal dignity to constitute a battery, the new restatement would add an entirely novel basis for liability: contact that is high-ly offensive to another’s “unusually sensitive sense of personal dignity,” where the actor “knows that the contact will be highly offen-sive to the other.”

The ALI considered and rejected a nar-rower approach imposing liability only when the defendant contacts the plaintiff for the very purpose of offending the plain-tiff; instead, the restatement as adopted re-quires only that the defendant know that the conduct is offensive.

The ALI’s restatements, while themselves not binding law, are highly influential. In addition to attempting to codify the prevail-ing common law, the ALI also seeks to craft new law as it sees fit for its “better adapta-tion to social needs.”

The ALI’s new definition of battery un-questionably was adopted pursuant to that latter prerogative. The protection of indi-viduals of “unusual sensitivity” from con-duct that they perceive as highly offensive is not the prevailing law. In fact, as report-ed in a formal objection to the definition by two ALI members, “such a rule has been rejected by every court that has considered the question.”

Indeed, adoption of the ALI’s definition of battery inevitably would lead to a host of

unintended consequences in the real world. Professor Ronald D. Rotunda, himself an ALI member, critiques the restatement in a June 22 Wall Street Journal opinion piece and provides the example of a patient who informs a hospital that, based on his own religious views, he does not want any doc-tors or nurses of a particular religion to touch him.

In that situation, the hospital is now caught between the proverbial rock and a hard place. On the one hand, if the hospital refuses to accede to the patient’s bigoted re-quest, it risks a lawsuit from the patient for battery. If the hospital kowtows to the pa-tient’s request, it risks a discrimination law-suit from its doctors and nurses who other-wise might have provided medical care but now are forbidden from doing so because of their religion.

More absurd examples abound, with little imagination. It is not a stretch to see how be-haviors that once were merely impolite or rude in the workplace now may expose employees, and their employers, to liability for battery.

The restatement defines “contact” very broadly to include not only the actual touching of the plaintiff ’s person, but also causing any other object or substance to contact the plaintiff ’s person. The restate-ment explicitly states that the act of an em-ployee smoking a cigar in his own office, knowing that a co-worker present in the room found the smoke obnoxious (an ac-tual case from North Carolina that was dis-missed in 1979), “would very likely result in liability today.”

Consider an instance in which an em-ployee finds a co-worker’s body odor or per-fume to be similarly obnoxious. The em-ployee reports the offense to human re-sources, which then addresses the concern with the co-worker. But the employer and the co-worker are now on notice of the em-ployee’s particular sensitivity. Under the re-statement, they could face liability if the co-worker reports to work again sporting the offensive aroma.

And what about that annoying co-worker who uses the microwave to heat up her fish sandwich for lunch every Friday?

The new restatement will place employ-ers in a particularly difficult position when managing employees. Will employers be called on to ask certain employees wheth-er they have sensitivities that are peculiar to them? How will the employer know when to ask? And does the employer risk invad-ing that employee’s privacy by asking for such information?

Unfortunately, the new standard likely will have the perverse effect of discouraging employer efforts to promote courteous and respectful behavior in the workplace.

Consider a situation in which a female employee informs her employer that due to her religion, she finds any physical contact with men outside of her family to be highly offensive. Normally, we would applaud the efforts of an employer to provide sensitivity training to make its employees aware of this cultural belief. Under the restatement, how-ever, such training puts all employees on notice of the particular sensitivity and ex-poses them to a lawsuit based on an other-wise innocuous back-pat or handshake.

Is this really what the ALI had in mind, or is it simply an unintended consequence of an ill-conceived amendment?

Anti-bullying legislationWith respect to proposed “anti-bullying”

legislation, the waters are even murkier.Since 2003, 29 states have introduced

some version of workplace anti-bullying legislation. No state has yet adopted such a law, although the organization behind the effort, the so-called Workplace Bully-ing Institute, has been persistent in keep-ing the bills alive on the floors of state leg-islatures, introducing 11 bills in 10 states in 2015 alone.

The proposed legislation would create a new private cause of action for subjecting an employee to an “abusive work environ-ment” that causes physical or psychologi-cal harm. Under the current bill proposed in Massachusetts, for example, the “abu-sive” employee can be held personally li-able and the employer can be held vicar-iously liable for compensatory damages, punitive damages and attorneys’ fees.

The ambiguity inherent in the legis-lation’s language will open the door to a flood of frivolous claims. While current employment discrimination laws are in-tended to protect classes of people recog-nized as historically disadvantaged in the workplace, under the pending legislation anyone — regardless of race, nationality, sex, disability or age — is both a potential beneficiary and target of the legislation.

The proposed laws require no proof of discriminatory animus: legal redress would be available for “abusive con-duct” motivated by something as sim-ple as a personality clash or overzeal-ous management.

It is that last situation in which the un-intended consequences of the law are most apparent. Of course, from an employee’s perspective it can feel uncomfortable — perhaps even abusive — to receive pres-sure or criticism from a supervisor. But nobody would seriously challenge the em-ployer’s right to convey the message.

Supervisors need to know that they can communicate openly and candidly without fear of legal reprisal. By potentially label-ing such conduct as “abusive,” there exists a profound risk that high expectations go by the boards and employees are denied real opportunities for advancement.

Again, the law of unintended conse-quences rears its ugly head.

Leave it to HRIt is unreasonable to suggest that courts

are the appropriate forum for handling what are, in essence, civility disputes. It should come as no surprise that courts have repeatedly cautioned that they are not, nor should they be considered, “su-per-personnel departments.”

With new laws for battery and bully-ing in the workplace, the courts will be re-quired to play the role of psychoanalyst, spending time and resources determining plaintiffs’ particular subjective hyper-sen-sitivities and perceptions of offense and abuse by co-workers.

The appropriate forum for handling complaints of workplace behavior is at ground level: through HR and internal dia-logue, not through the court system.

The Supreme Court has warned that the employment laws are not to be used as a general civility code. But under these pro-posed laws to outlaw behavior that some might find discourteous or impolite, we move dangerously close to that paradigm.

The United States has always prided itself on its rugged, even idiosyncratic, individu-alism. And, at a time when corporate Amer-ica at least purports to celebrate diversity in the workplace, it is ironic that laws are being considered that would serve to clone workplace behavior.

blogmbbp.wordpress.com @MorseBarnes

mbbp.com

Corporate | IP | Licensing & Strategic Alliances | Employment & Immigration | Taxation | Litigation

Waltham, MA Cambridge, MA Salt Lake City, UT

In the delicate cross-cultural context of

international business transactions,

the importance of a sensitivity to other cultures,

combined with strong interpersonal skills,

has been proven time and time again.

Morse, Barnes-Brown & Pendleton has represented

American companies in their international

business dealings in over 40 countries.

Start. Run. Grow. Protect. Profit....here, or anywhere.

We help clients...

By Timothy P. Van Dyck

Timothy H. Powell

Timothy P. Van Dyck is a partner, and Timothy H. Powell is an associ-ate, in the labor and employment prac-tice at Bowditch & Dewey. The Massa-chusetts-based firm represents employers of all sizes, from Fortune 50 companies to startups.

SpECIAl FEATuREOutlawing impolite behavior at work: an ominous trend


As all in-house attorneys know, in most transactions of any complexity, the parties first execute a letter of intent, or LOI, or other preliminary document before proceeding to sign a final agreement.

These so-called “pre-contractual agree-ments” usually outline important deal terms and identify what further negotiations or steps must be completed before finalizing the deal. Invariably, the task of negotiating and drafting such documents falls to the in-house lawyer, either directly or through out-side counsel.

How you craft the LOI may not only influ-ence whether the deal comes together, but also whether you win or lose in court if it falls apart.

In the enthusiasm and rush to close a high-stakes transaction, no one wants to envision things going south. However, savvy in-house

counsel must be keenly prepared for that possibility as they help their client think through the provisions of an LOI.

Naturally, knowing how to choose the right phrasing of key terms depends entirely on your client’s objectives.

For example, does your CEO want the LOI to bind the other party and limit its ability to back out of the deal? Or, alternatively, is your client interested in preserving its own ability to walk away for some reason, such as for a problem that turns up in due dili-gence? Knowing the answers to those ques-tions is essential to putting the final docu-ment together.

Of course, most transactions are unique and involve dozens of material terms and moving parts, so no “one-size-fits-all” meth-od is available for putting together a perfect LOI. Courts have, however, delineated some clear principles that in-house counsel should grasp fully before advising their clients.

At a high level, the most important con-cept is what language to employ so that the LOI either creates a binding obligation or does not, depending on your client’s objec-tive. Knowing that, you will be in a better position to handle a dispute if the parties don’t proceed to closing and, instead, end up in litigation.

While this article deals primarily with Massachusetts law, a brief reference to New York law will highlight another point coun-sel should bear in mind: the sometimes stark differences in how courts of other jurisdic-tions treat identical language in an LOI.

Is the LOI binding or not?Before your client executes an LOI, the

most critical question is whether your cli-ent wants the LOI to be a fully binding doc-ument. While you may not necessarily share the answer to that question with the other side, your client’s view on the issue will drive the way you draft the language of the LOI.

For example, if your client wants to pre-serve its right to walk away from an ongoing negotiation for whatever reason, Massachu-setts courts have recognized that including a “safe harbor” provision will accomplish that purpose. The Massachusetts Appeals Court has cited several examples of how to word such a provision.

Most notably, in Schwanbeck v. Fed.-Mo-gul Corp., 31 Mass. App. Ct. 390, 393 (1991), rev’d, 412 Mass. 703 (1992), the Appeals Court quoted the following language from an LOI: “Of course, this letter is not intended to create, nor do you or we presently have any binding legal obligation whatever in any way relating to such sale and purchase[.]”

In citing that passage, the court noted: “[h]ere is the sort of express limiting provision which we described in Goren v. Royal In-vestments, Inc., 25 Mass. App. Ct. 137, 142-143 (1987), as affording a safe harbor to par-ties who do not wish to be bound by a pre-liminary document.”

While the Supreme Judicial Court reversed the Appeals Court in Schwanbeck on other grounds, Massachusetts appellate courts have consistently upheld the enforceability of such safe harbor language.

Importantly, while explicit statements that the parties do not intend to be bound are en-forceable, simply stating that the parties in-tend to later execute a more formal contract may be insufficient to prevent the LOI from being binding if a court finds that the parties have otherwise reached agreement on all ma-terial terms of the deal. See, e.g., Hunneman Real Estate Corp. v. Norwood Realty, Inc., 54 Mass. App. Ct. 416, 423 (2002).

Therefore, counsel wishing to make certain that their clients will not be held to the terms of a pre-contractual agreement are wise not only to choose language of the type suggested by the Appeals Court, but also to include oth-er qualifying and conditional terms.

For example, including in the LOI a state-ment that the parties intend to “proceed to negotiate in good faith a definitive” final agreement coupled with an identification of the material terms left to be negotiated also will signal clearly that the LOI is not binding. Schwanbeck, 412 Mass. at 706 (holding that such phrasing “is merely a promise made with an understanding that it is not to be le-gally binding, but only a statement of pres-ent intention”).

By including such language, counsel should be aware that, in contrast to Massa-chusetts, New York law holds that such lan-guage does create a binding obligation to ne-gotiate in good faith toward a final contract. See, e.g., Brown v. Cara, 420 F.3d 148, 157 (2d Cir. 2005) (holding under New York law that parties’ expression in LOI of intent to negotiate in good faith toward final contract created “an obligation to negotiate the open issues in good faith in an attempt to reach the ultimate contractual objective within the agreed framework”).

When circumstances are reversed and your client wants to bind the other party at the LOI stage, matters are trickier because experienced business people, even those ea-ger to complete a transaction, are justifiably wary of being bound too soon.

In addition, simply declaring in the LOI that it “constitutes a legally binding commit-ment” (which is a good start, by the way) will be of little effect if a court later determines there was no meeting of the minds over a material term.

The solution, then, in addition to stating clearly that the document is binding, is to draft it with as much detail concerning all the material terms of the deal as possible. When an LOI is unambiguous, “its interpretation is a question of law that may be resolved” by the court. Seaco Ins. Co. v. Barbosa, 435 Mass. 772, 779 (2002).

Therefore, if the parties reach the LOI stage after lengthy negotiations that have result-ed in agreement on all material terms, then counsel wishing to preserve the deal should memorialize each and every one of those points in the LOI.

That is especially true when you or your client fears the other side may backslide or attempt to renegotiate deal points that you believe have already been agreed upon. While memorializing the terms of a deal can be touchy if the parties perceive that the transaction is not yet complete, it is surely better to know sooner rather than later if the other side is reluctant about being pinned down on areas where you believe there is agreement.

What happens if you end up in court?

While no one likes to imagine it, if a deal does fall apart, the frustrated party some-times resorts to litigation (which, of course, may be you). If you have negotiated and drafted your LOI to meet your client’s objec-tives, you probably have taken a big step to-ward ensuring that any ensuing litigation goes your way.

For example, if your client was the one trying not to be bound and, in fact, chose to walk away from the deal, then the safe har-bor and other qualifying language should set you up well to try for early dismissal of a case seeking contractual enforcement of the LOI.

Conversely, if you were the side seeking to create a binding obligation and the other side decided to renege, then your well-writ-ten LOI can provide the basis for seeking a preliminary injunction to prevent the other side from walking away and, potentially, try-ing to close a similar transaction with anoth-er party.

Either way, ensuring that the LOI is drafted unambiguously and informed by established precedent in the applicable jurisdiction will position your client to succeed in court.

ConclusionGiven the importance of drafting LOIs

with an eye on how courts interpret and en-force them, here’s something all in-house at-torneys should (but probably rarely) do be-fore your client signs an LOI: run the doc-ument by a litigator first. Why? Litigators only see deals that have failed, meaning they are especially attuned to how courts will view the key provisions and language you’ve employed.

A seasoned litigator can provide an im-portant double check to ensure your LOI is accomplishing your intended objectives, and, equally, he or she can draw your attention to provisions that may not be at the forefront of your mind.

For example, you may not have thought about including a choice of law provision in the LOI; but as illustrated above, if the con-tracting parties are from different states, the difference between whether one state’s law applies over another’s can determine the en-forceability of the LOI.

Taking the time to think through such is-sues will prove to be time well spent if any bumps arise in the road toward the finish line of the deal.

LOI drafting tips for meeting the client’s objectives SpECIAl FEATuRE

By Tyler E. Chapman

Tyler E. Chapman is a partner at Todd & Weld in Boston. He has a general com-mercial litigation practice with a focus on real estate matters, complex business liti-gation and closely held business disputes.

When your case is challenging. When the outcome is critical.

Rely on Todd & Weld.

One Federal Street | Boston, MA 02110 | 617.720.2626

www.toddweld.com

J. Owen Todd Christopher Weld Jr.

The Highest Level of Trial Advocacy

We established the firm with one bedrock principle in mind: Our attorneys would always provide to clients

the highest level of trial advocacy.

As Todd & Weld has grown over the years since its inception in 1992, we have stayed true

to an unwavering commitment to excellence.

It's our hallmark.

Regardless of the stakes or complexity of a dispute involving a business, real estate, or other matter, we consistently help

clients obtain their goals in and out of the courtroom with innovative, cost-effective, and thoughtful strategies.

http://www.toddweld.com

AUGUST 2015 | New England IN-HOUSE | page 11 SpECIAl FEATuRE

Medicinal use of marijuana has been decriminalized throughout New En-gland. The first Massachusetts medical marijuana dispensary opened its doors on June 24. It is now clear that medi-cal marijuana is quickly becoming an everyday aspect of health care deliv-ery in New England and throughout the country.

But legalization of medical marijua-na has created a great deal of confusion for employers. Taking into account the complexities of state and federal drug, drug-testing, privacy and disability laws, what is the best course for employers so that they can make smart real-time de-cisions and stay out of trouble?

Med-marijuana laws in New England

The new medical marijuana laws in the six New England states all provide that qualified medical marijuana users may not be “denied any right or privi-lege” because of their legitimate mari-juana use for medicinal purposes under the respective state laws.

The Connecticut and Maine statutes prohibit employers from making hiring and firing decisions solely on the basis of an individual’s status as a qualified medical marijuana user.

As to reasonable accommodation for disabled workers, other than in Ver-mont, the New England medical mari-juana laws each explicitly provide that allowing employees to use medical mar-ijuana on-site and/or to work under the influence of marijuana does not consti-tute reasonable accommodation.

The Massachusetts “Act for the Hu-manitarian Medical Use of Marijuana” states, for example: “[n]othing in this law requires an accommodation of any on-site medical use of marijuana in any place of employment … .”

Notably, however, each of these med-ical marijuana statutes is silent as to whether tolerance of the legitimate use of medical marijuana off-site and off-hours is required as a reasonable accom-modation to enable disabled employ-ees to perform the essential functions of their jobs under applicable fair employ-ment and disability discrimination laws.

While legislation has been proposed

to more fully address the employer-em-ployee relationship in view of the legal-ization of medical marijuana, no fur-ther statutory or regulatory guidance is yet available.

Lawsuits against employersLitigation around the country has re-

sulted from employers discharging em-ployees who are medical marijuana us-ers when they test positive for marijua-na on mandatory drug tests.

Courts in California, Montana and Washington, for example, have found in favor of defendant-employers on various grounds. See Ross v. Raging Wire Tele-communications, Inc., 42 Cal. 4th 920 (2008) (California Compassionate Use Act does not provide private right of ac-tion or create public policy to support wrongful discharge claim or right to ac-commodation under state fair employ-ment law); Johnson v. Columbia Falls Aluminum Co., LLC, 209 MT 108N (2009) (Montana Medical Marijuana Act explicitly provides that employers are not required to accommodate employee use of medical marijuana); Roe v. Tele-Tech Customer Management (Colo.) LLC, 171 Wn. 736 (2011) (Washington Medical Use of Marijuana Act does not provide private right of action or create public policy to support wrongful dis-

charge claim or right to accommodation under state fair employment law).

In its June 15, 2015, decision Coats v. Dish Network, LLC, Advance Sheet No. 13SC394, the Colorado Supreme Court concluded that an employer’s termina-tion of a “card-carrying” quadriplegic medical marijuana user for testing pos-itive for marijuana on a random drug test did not violate the Colorado Law-ful Activities Act, 24-34-402.5, C.R.S. (2014), which prohibits employers from discharging employees because of off-site, off-hours “lawful activities.” Re-jecting the plaintiff ’s argument that the lawful activities statute includes only state law, not federal law, within its defi-nition of “lawful,” the Colorado Supreme Court concluded that medical marijuana use is not “lawful” because it violates the federal Controlled Substances Act, 21 U.S.C. §844(a)(2012), under which mar-ijuana is classified as an illegal “Sched-ule I” controlled substance.

The Coats court cited the U.S. Su-preme Court’s decision in Gonzales v. Raich, 545 U.S. 1 (2005), in which the Supreme Court determined that the Controlled Substances Act pre-empted the California medical marijuana stat-ute under the Supremacy Clause of the U.S. Constitution.

Controlled Substances ActIn spite of decriminalization of mar-

ijuana for medical and/or recreational purposes in 23 states and the District of

Columbia, marijuana currently remains a Schedule I chemical under the feder-al Controlled Substances Act. Marijuana was classified as a Schedule I controlled substance in 1970 when it was deter-mined to have high potential for abuse; no currently accepted medical use in the U.S.; and to be unsafe, even under medi-cal supervision.

While there is now substantial bi-par-tisan support for re-classification of marijuana under the Controlled Sub-stances Act, at this point, the “posses-sion, distribution, manufacture, cultiva-tion, sale and transfer” of marijuana still violate this federal law.

In recognition of the quickly expand-ing legalization of medical marijua-na use under state law, amendments to the Commerce, Science and Justice Ap-propriations Bill this year, in both the House and Senate, explicitly bar the De-partment of Justice from spending mon-ey to interfere with states’ implementa-tion of medical marijuana laws.

By de-funding federal enforcement of the Controlled Substances Act with re-spect to medical marijuana use in any state in which the drug can be lawfully used for medicinal purposes, lawmak-ers have effectively nullified the federal measure that would otherwise pre-empt state laws legalizing the use of medi-

cal marijuana.

Pending litigation in Massachusetts

The case of Barbuto v. Advantage Sales and Marketing LLC is the first case brought in Massachusetts chal-lenging the termination of an employee based on her use of medical marijuana.

Plaintiff Cristina Barbuto claims to be a qualified, card-carrying medical marijuana user, with a prescription for low-dosage marijuana to treat the symp-toms of Crohn’s disease and irritable bowel syndrome.

Barbuto was hired by defendant Ad-vantage Sales and Marketing LLC as a Massachusetts-based “brand am-bassador” in the company’s market-ing department.

Her employment offer was rescind-ed and she was sent home after her first day of employment due to the results of a drug test indicating marijuana use. When she protested, Barbuto allegedly was told by a human resources represen-tative that the employer followed federal law, not state law.

At this time, the case is pending be-fore the Massachusetts Commission Against Discrimination and is expect-ed to be filed shortly in state or feder-al court. Barbuto claims in her charge of discrimination that she was capa-ble of performing the essential func-tions of her job and was unlawfully

discriminated against in violation of G.L.c. 151B for no reason other than the manner in which her disabilities are medically treated.

According to Barbuto’s lawyer, the fo-cus of his client’s legal claims is at least two-fold, including a claim for violation of her privacy rights under G.L.c. 214, §1B, in addition to her disability dis-crimination claim.

The Massachusetts Privacy Act, G.L.c. 214, §1B states: “[a] person shall have a right against unreasonable, substantial or serious interference with his priva-cy.” The privacy statute provides a pri-vate right of action and legal and equita-ble relief.

Based on her MCAD charge, Barbuto is seeking recovery for lost wages, harm to her reputation and emotional dis-tress damages.

Employers should promptly re-evaluate policies

This new and unsettled area of the law creates significant challenges for employers.

To reduce the risk of legal claims and litigation, it is critical that employers work with their employment counsel to re-evaluate drug-testing policies and carefully consider situations related to employee use of medical marijuana.

Employers are well advised — at a minimum — to follow existing precedent with regard to employee drug-testing.

In Massachusetts, a mandatory drug-testing policy will pass muster under the Privacy Act when the legiti-mate business interests of the employ-er outweigh the privacy interests of the employee.

To determine the legitimate business interests of an employer, the courts look to such factors as assessment of the safe-ty risks posed by the employee based on his/her specific job duties. See Webster v. Motorola, Inc., 418 Mass. 425, 432 (1994), citing Folmsbee v. Tech Tool Grinding & Supply, Inc., 417 Mass. 388, 392 (1994).

For positions that do not involve safety concerns, mandatory drug-test-ing may not survive the scrutiny of the courts.

Absent some other compelling legit-imate business reason to require test-ing, employers are unlikely to prevail if their drug-testing policy is challenged. See Webster at 433-434 (finding that an employee whose job duties do not pose “an immediate risk to health and safety” has a privacy interest that outweighs the employer’s interest in drug-testing).

Accordingly, mandatory drug-testing for jobs that do not involve a safety risk should be promptly and carefully recon-sidered in light of the new medical mar-ijuana laws.

When an employee uses marijuana for medicinal purposes in compliance with medical marijuana laws and per-formance of his or her job does not pose a safety risk, any adverse action against the employee for testing positive for marijuana should be taken with great caution.

For employers, time to review drug-testing policiesBy Tamsin R.

Kaplan David

M. Rogers

Tamsin R. Kaplan is a shareholder at the Boston law firm of Davis, Malm & D’Agostine. She practices in the business law, employment and litigation areas. She can be contacted at [email protected]. David M. Rogers is of coun-sel at Davis Malm. He practices in the business law, employment, and real es-tate and environmental areas. He can be contacted at [email protected]. Matthew Lewis also helped author this article. He is a summer intern at the firm and a McGill University student.

Mandatory drug-testing for jobs that do not in-volve a safety risk should be promptly and care-fully reconsidered in light of the new medical marijuana laws.






The federal government is taking ag-gressive action through various enforce-ment agencies to ban discrimination based on sexual orientation and gender identity. These efforts affect private employers, pub-lic employers and federal contractors.

Accordingly, all employers should re-view their policies and procedures to de-termine if changes are warranted and con-sider training managers and human re-sources personnel on best practices in this emerging area of the law.

BackgroundCurrently, 21 states and the District of

Columbia have statutes prohibiting sexu-al orientation discrimination in employ-ment, and 17 states and DC have statutes prohibiting gender identity discrimination in employment.

However, there is no corresponding fed-eral law. A proposed federal law, the Em-ployment Non-Discrimination Act, or ENDA, would have amended Title VII of the Civil Rights Act of 1964 to include “sexual orientation” and “gender identity” as protected categories. ENDA, however, has failed in Congress.

Notwithstanding ENDA’s fate, various federal agencies are construing “sex dis-crimination” broadly to encompass dis-crimination based on sexual orientation and gender identity. Specifically:

• The U.S. Equal Employment Opportu-nity Commission has argued in lawsuits, amicus briefs and administrative rulings that adverse employment actions based on sexual orientation and gender identity constitute unlawful sex discrimination.

• The U.S. Department of Justice has ex-panded its definition of sex discrimination to include discrimination based on gen-der identity.

• In implementing a presidential exec-utive order, the Office of Federal Contract Compliance Programs of the U.S. Depart-ment of Labor has banned federal contrac-tors from discriminating on the basis of sexual orientation and gender identity.

• The U.S. Office of Special Counsel, which investigates and prosecutes com-plaints by federal employees, has ruled that the Department of the Army commit-ted sex discrimination in its handling of a worker’s gender transition.

EEOC As “coverage of lesbian, bisexual and

transgender individuals under Title VII’s sex discrimination provisions” is a top “en-forcement priority” at the EEOC, the agen-cy filed two lawsuits last fall charging em-ployers (a Michigan funeral home and a Florida eye-and-ear clinic) with unlawful-ly terminating employees for transitioning from male to female.

In the Michigan case, the EEOC alleges that a funeral home illegally fired its di-rector of 14 years after the employee an-nounced that she was transitioning from male to female and would soon start to “present” (or dress) in women’s clothes.

In the Florida case, the EEOC claimed that an eye-and-ear clinic illegally fired its director of hearing services for wear-ing feminine clothing and announcing that she had begun transitioning from male to female.

The EEOC recently secured a settle-ment of the Florida suit, under which the clinic agreed to pay the former employee $150,000 for back pay and emotional dis-tress, to implement a transgender non-dis-crimination policy, and to provide appro-priate training to all its employees regard-ing that policy.

The EEOC also has filed amicus briefs in cases involving similar issues. For ex-ample, it asked the 7th U.S. Circuit Court of Appeals to reconsider a decision indi-cating that Title VII does not encompass sexual orientation discrimination. The 7th Circuit, in turn, amended its opinion to remove such statements and support-ing citations.

In support of its position that discrim-ination based on sexual orientation and gender identity is a form of sex discrimi-nation prohibited by Title VII, the EEOC relies on the U.S. Supreme Court’s 1989 decision in Price Waterhouse v. Hop-kins. The court ruled in that case that an adverse employment action based on an employee’s failure to conform to gender

stereotypes is a form of sex discrimination.In 2012, the EEOC applied that expan-

sive view of sex discrimination in deciding an administrative appeal within the feder-al civil service system. In Macy v. Holder, the Bureau of Alcohol, Tobacco, Firearms, and Explosives rejected a job applicant based on her transgender status. When the applicant appealed, the EEOC ruled that ATF had committed sex discrimi-nation under Title VII in its handling of the application.

Of the 13 federal appeals courts, two (the 6th and 11th circuits) have adopted the EEOC’s broad interpretation of sex dis-crimination under Title VII, and two more (the 1st and 9th circuits) have suggest-ed that transgender plaintiffs may pursue sex-stereotyping theories under Title VII.

The EEOC is expected to continue with such cases until either all federal circuits adopt its position or a circuit split emerg-es (which would support a petition for the U.S. Supreme Court to decide the matter).

The EEOC should have ample oppor-

tunity to pursue this agenda. In the first three quarters of Fiscal Year 2014 (October 2013 to June 2014), the EEOC received 663 charges alleging sexual orientation dis-crimination and 140 charges alleging gen-der identity discrimination. Those num-bers are believed to be on the rise.

DOJTaking the EEOC’s lead, the Department

of Justice has expanded its definition of sex discrimination to include discrimination based on gender identity.

Marking a reversal in the DOJ’s posi-tion, the U.S. attorney general circulated a memo to DOJ components and U.S. attor-neys barring the department from arguing that transgender individuals are not cov-ered by Title VII.

The decision also enables the DOJ’s Civ-il Rights Division to file Title VII claims against state and local public employers on behalf of transgender individuals.

OFCCPAs required by President Obama’s exec-

utive order, the Office of Federal Contract Compliance Programs has added sexual orientation and gender identity to the pro-tected characteristics applicable to feder-al contractors.

Under the order, covered federal con-tractors are: (a) prohibited from mak-ing discriminatory employment decisions on the basis of sexual orientation or gen-der identity, and (b) required “to take af-firmative action to ensure that applicants are employed, and employees are treat-ed during employment, without regard to their ... sexual orientation and gen-der identity.”

The OFCCP’s implementing regulations, which took effect April 8, apply to all cov-ered contracts entered into or modified af-ter that date. The regulations require con-tractors to: (a) update the equal employ-ment opportunity (EEO) clause in new or

modified contracts, subcontracts and pur-chase orders to state that applicants and employees will be treated equally with-out regard to their “race, color, religion, sex, sexual orientation, gender identity, or national origin”; (b) similarly update the EEO language in job solicitations and post-ed workplace notices; and (c) ensure that applicants and employees are treated with-out regard to their sexual orientation and gender identity.

OSCEven the Army has not been immune

from this federal campaign to accord pro-tected status to sexual orientation and gen-der identity. In this regard, the Office of Special Counsel determined in a landmark decision that the Army discriminated against an employee after she announced a gender transition.

The matter involved a software quality specialist at an Army facility in Alabama. After the employee changed her name and began presenting as a woman, her supervi-

sors said her use of the women’s restroom was “making other employees uncomfort-able” and asked her to use an individual, sex-neutral restroom. One manager con-tinued to use male pronouns when refer-ring to her and tried to restrict her conver-sations with co-workers out of a belief that they were uncomfortable with her trans-gender status.

The OSC found that, through such ac-tions, the Army committed discrimination in violation of the Civil Service Reform Act. The law protects federal workers from adverse treatment based on conduct unre-lated to job performance.

Recommendations for employers

In light of this federal push to protect employees in all sectors from discrimina-tion based on sexual orientation and gen-der identity, there are a number of steps employers should take.

First, employers should review both ap-plicable law and their EEO policies and procedures with employment counsel to determine whether their policies and pro-cedures adequately address discrimina-tion based on sexual orientation and gen-der identity.

Second, employers are advised to pro-vide training on sexual orientation and gender identity discrimination to their managers and human resources personnel, in order to reduce risky workplace behav-ior and the potential for liability.

Additionally, employers that are federal contractors should review and update all anti-discrimination policies, EEO claus-es, affirmative action plans, contract pro-visions, job solicitations, posted workplace notices, and other materials to appropri-ately incorporate sexual orientation and gender identity as protected categories.

Finally, all employers should closely monitor further developments in this rap-idly developing area of the law.

SpECIAl FEATuRE Feds take aim at sexual orientation, gender ID bias

By Brian D. Carlson

Brian D. Carlson is an attorney at Schwartz Hannum in Andover, Massa-chusetts. The firm represents management in labor and employment law matters.

www.newenglandinhouse.com

.. [email protected]

DISPUTERESOLUTION LLC

SimplyResolvingComplexDisputes.

ADR

ClassifiedsTo be listed in the

NEIH Directory, call Elaine Fanning at (617) 218-8222

or [email protected]








By Thomas E. Egan














WIKIPEDIA COMMONS

ISTOCK


By Eric T. Berkman
















Marking a reversal in the DOJ’s position, the U.S. attorney general circulated a memo to DOJ compo-nents and U.S. attorneys barring the department from arguing that transgender individuals are not covered by Title VII.

mailto:.%EF%99%85%EF%99%87%EF%99%84.%EF%99%87%EF%99%85%EF%99%8C%EF%99%8C%ED%AF%80%ED%B0%81%ED%AF%80%ED%B1%B4%ED%AF%80%ED%B0%[email protected]

http://www.fitzgeraldresolution.com

http://www.newenglandinhouse.com



“Directors are like parsley on fish — decorative but useless.”

— Irving Olds, former chairman of Bethlehem Steel

***

In litigation decided in May by the Del-aware Supreme Court, minority share-holders (who were frozen out through a merger engineered by a controlling stock-holder) agreed with Olds’ description, claiming that all the corporate directors of Cornerstone Therapeutics were useless in efforts to obtain a fair merger price for their shares.

The history of the case is a study in the evolving law of director liability.

Legal backgroundMost larger corporations are formed

in Delaware. Where there is a substantial merger, shareholder suits claiming breach of fiduciary duty follow in over 90 per-cent of cases (true for four straight years through 2013). Directors of Delaware cor-porations are getting sued continually.

The Delaware General Corporation Law permits corporate charters to eliminate li-abilities of directors for breach of fiduciary duties owed to the corporation or stock-holders unless the director is doing some-thing wrong, e.g., has breached the duty of loyalty, acted in bad faith or with inten-tional misconduct, knowingly violated law, or derived improper personal benefit.

Delaware directors also are protected by the “business judgment rule.” A direc-tor can be wrong, reach an incorrect con-clusion, and still avoid liability if free of wrong-doing and gross dereliction of duty.

But significant Delaware litigation has developed a different standard when di-rectors have personal self-interest. Among other matters relating to self-interest, if a controlling shareholder, individual or cor-porate, effects a merger that freezes out the minority, that shareholder has an affir-mative obligation to meet a so-called “en-tire fairness” standard: were the financial terms of the merger within a range of fair-ness to the minority?

Further, that shareholder’s representa-tives on target boards similarly must have their actions reviewed, in that the trans-action itself was subject to an “entire fair-ness” test.

CornerstoneCornerstone was a publicly traded com-

pany, in which an Italian drug manufac-turer obtained a controlling stock position in 2009 and thereafter increased owner-ship to in excess of 60 percent.

In February 2013, the controlling share-holder offered to acquire all third-party Cornerstone stock at between $6.40 and $6.70 per share, which was over a 20 per-cent premium to market.

The controlling shareholder might have avoided analysis of whether its offer met the “entire fairness” standard if, pursuant to Delaware case law, it had specifically stated that its offer was conditioned on both the approval of an independent spe-cial board committee and a majority of minority shares, but did not do so.

Reporting U.S. companies must have a majority of its board “independent.” A majority of the Cornerstone board was

thought by the entire board to be inde-pendent, and five “independent” directors were formed into a “special committee” to represent the target in the merger.

The special committee retained both a major law firm and a major investment bank. The directors spent seven months, held 37 meetings, and received seven “sep-arate detailed financial presentations from its independent financial advisor.”

The special committee first re-quested $11 to $12 per share, which elicited a modest count-er-offer of $8.25 per share and a statement that the controlling shareholder would go no higher.

In an exercise of hardball power, controlling shareholder’s CFO also advised the special committee that the ma-jority shareholder had the right to fire all of them as well as the management team. Notwithstanding, the special committee rejected the offer and made a counter-pro-posal at $11, which was not accepted.

Shortly thereafter, Cornerstone missed its numbers for Q-1 2013. The special committee lowered its price to $10.25 per share and requested permission to shop the deal to third parties. Both elements of that offer were rejected.

Things continued to deteriorate for Cor-nerstone. In June, a major competitor an-nounced a possibly competing drug and alleged that target’s patents were either in-valid or would not be infringed.

The special committee dropped its of-fer to $9.75, elicited an August counter-of-fer of $9.25, and in September the parties agreed to $9.50 per share.

Immediately, Internet traffic began fo-menting a class action suit on behalf of minority shareholders: might the price be inadequate; the controlling shareholder owned about 60 percent of the outstanding stock; one analyst had a $14 target for the Cornerstone shares; can the Cornerstone directors seek additional bidders; did the Cornerstone directors get an appraisal; will the upcoming proxy statement (not even then drafted) be accurate and complete about executive compensation?

Some minority shareholders joined class action suits, at no cost to them-selves, against both the corporation and all directors.

Immediately, complaints were filed (one even in September) claiming breach of

fiduciary duty. The company filed a pre-liminary proxy statement in October 2013.

At the stockholders’ meeting in ear-ly 2014, the merger agreement was ap-proved by more than 80 percent of the minority stockholders, and the merger was effectuated.

The plaintiffs claimed breach of fiducia-ry duty against all the directors, includ-ing the independents. Directors affiliated with the controlling shareholder, which froze out the minority, clearly were sub-ject to a suit on the merits to determine if they had breached their duty of loyalty, as the entire fairness standard applied to the transaction.

But the special committee of indepen-dent directors in effect said: “Wait a min-ute, we didn’t do anything wrong.” Al-though the controlling shareholder and its board representatives should be held to a

review under entire fairness, the indepen-dent directors were entitled to charter ex-oneration at the pleading stage.

The independent directors have the ben-efit of the General Corporation Law, which permits exoneration from liability where directors did not breach a duty of loyalty, did not act in bad faith or in knowing vi-olation of law, and did not derive improp-er personal benefit. No such allegation of breach, improper action or improper ben-efit was alleged against them, only that the transaction required entire fairness review.

Chancery Court 2014In a rambling, informative Delaware

Chancery Court opinion, Vice Chancellor Sam Glasscock III sympathized with the independent directors, noted the substan-tial efforts of the special committee, and observed the 80 percent affirmative vote of minority shareholders and that $9.50 gave a substantial premium over market.

Glasscock next noted that the burden of proof (given approval by the minori-ty shareholders) shifted to the plaintiffs to disprove entire fairness, and that the burden of proof also shifted where an in-dependent committee freely negotiates the transaction.

Nonetheless, the court held that where a transaction is subject to entire fairness, then no director can be afforded summary judgment (dismissal) until the matter has been litigated (even where no non-excul-pated action has been pleaded against in-dependent directors).

Having so decided, Glasscock did not have to deal with allegations that direc-tors on the special committee were not

independent; their independence did not matter for purposes of his decision.

Nor did Glasscock have to deal with the impact of the threat of firing all the di-rectors, although he suggested in pass-ing that the very existence of that threat might have coerced the directors who had a self-interest in remaining in office.

The decision thus left unevaluated the claim that a couple of the special commit-tee members lacked independence in that they were involved in a company previous-ly acquired by the controlling shareholder; and further, that the other “independent” directors were “hand-picked” by the tar-get CEO.

Supreme Court 2015The independent directors appealed to

the Delaware Supreme Court, which, in May, reversed the decision as a matter of law on the theory that the charter provi-sion exonerating independent directors from breach of fiduciary duty claims (ab-sent wrong-doing) must be enforced.

If there is no allegation that a director specifically breached his duty of loyalty or derived improper personal benefit or in-tentionally committed misconduct or vio-lation of law, then that independent direc-tor is entitled to be relieved from suit.

The fact that the whole transaction, and the liability of the controlling stockholder, will be subject to an entire fairness review is irrelevant to the exoneration of a truly independent director.

In the words of Chief Justice Leo E. Strine Jr., “... the mere fact a plaintiff is able to plead facts supporting the application of the entire fairness standard to the trans-action, and can thus state a duty of loyal-ty claim against the interested fiduciaries, does not relieve the plaintiff of responsibil-ity to plead a non-exculpated claim against each director who moves for dismissal.”

In so deciding, the Supreme Court did not comment on an interesting speculation contained in the Chancery opinion: that opening independent directors to non-dis-missible suit could have the anomalous ef-fect of making independent directors dis-inclined to serve on special committees, which are important to protect minori-ty shareholders.

Concluding speculation The tide is running in favor of direc-

tors generally, at least in Delaware. In June, Delaware amended its corporation statute to expressly permit a bylaw requirement that investors’ fiduciary breach of duty suits be brought only in Delaware.

Although Delaware law specifically pro-hibits a provision in the bylaws requiring losing plaintiffs to pay the winners’ attor-neys’ fees, the forum-shifting provisions for litigation is yet another step in carv-ing out rational protections for corporate directors who are sued even though they have exercised their honest judgment in protecting minority shareholders.

Sign up today for FREE at http://newenglandinhouse.com/e-mail-signup/

SpECIAl FEATuRE The care and protection of the independent director

By Stephen M. Honig

Stephen M. Honig is a lawyer at Duane Morris in Boston.

The tide is running in favor of directors generally, at least in Delaware.

Sign up for the WEEKLY ALERT and get access to the most important news and case digests.








By Thomas E. Egan














WIKIPEDIA COMMONS

ISTOCK


By Eric T. Berkman
















http://newenglandinhouse.com/e-mail-signup/


itself from the complainant.But MCAD hearing officer Betty E. Wax-

man rejected respondent BC’s justifications, noting agreements the school entered into with Armstrong that provided for his grad-ual reintegration into the chemistry depart-ment faculty following a one-year leave and psychiatric treatment for bipolar disorder, an illness marked by depression and mania.

“There can be no doubt that Com-plainant’s anonymous e-mails constituted grossly inappropriate behavior, were outra-geous in content, and were cowardly in their method of transmission,” Waxman wrote. “In response to Complainant’s misconduct in 2002, Respondent could have taken steps to remove Complainant as a tenured facul-ty member. The record establishes, howev-er, that Respondent, under the leadership of University President Father [William P.] Leahy, opted for a redemptive rather than

punitive approach to Complainant’s mental health struggles.”

Waxman concluded that the terms of the agreements constituted accommodations, that Armstrong’s efforts to enforce the terms were protected activity (along with subsequent efforts to obtain redress), and that BC’s continued isolation and punish-ment of Armstrong were in retaliation for that protected activity.

She ordered the school to pay Armstrong $125,000 in emotional distress damages as well as the differential, beginning in the 2003-2004 academic year, between his sala-ry and that of the next-lowest-paid tenured associate professor of chemistry.

The 44-page decision is Armstrong v. Boston College.

Nail in coffinArmstrong was represented by MCAD

counsel William F. Green. The Boston law-yer, who recently retired from the commis-sion, called the decision a “landmark” vic-tory for those suffering from mental health problems that others often dismiss as “char-acter flaws.”

“You don’t persecute and terrorize some-one for a mental health issue,” Green said. “It doesn’t excuse [Armstrong’s] behavior; it was reprehensible. But he got treatment, he came back, and he did his best. Yet every time he asserted his rights, Boston College came down on him and retaliated against him.”

The school was represented by Alan D. Rose of Boston’s Rose, Chinitz & Rose. He said only that BC planned to pursue “all available appellate remedies.”

Green said it was not the actions of in-dividuals in the chemistry department, but the inaction of Boston College as an institu-tion that was especially egregious, particu-larly in light of a faculty grievance commit-tee report that sided with Armstrong and concluded that the school and its former provost, Cutberto Garza, should reintegrate him into the department.

“We’re all allowed, under the law, our own individual prejudices,” Green said. “But insti-tutions are not allowed under the law to have prejudices. They’re supposed to act in an en-lightened way in accordance with the law. [BC officials] just completely let themselves be co-opted by the leadership in the chemis-try department.”

Kimberly A. Klimczuk, a manage-ment-side employment lawyer at Skoler, Abbott & Presser in Springfield, Massa-chusetts, said “one of the nails in the coffin” for BC was when it ignored its faculty griev-ance committee.

“It makes it seem like they really were out to get this guy,” she said. “The grievance committee found the [chemistry] depart-ment acted inappropriately; why would the MCAD or anyone else disagree with that?”

Boston lawyer Paul H. Merry, who rep-resents plaintiffs in employment cases, said Waxman’s decision breaks new ground by

departing from the Supreme Judicial Court’s 2006 decision in Mammone v. President and Fellows of Harvard College.

“The [SJC] held that inappropriate activi-ties or conduct due to a disability is not pro-tected,” Merry said. “In other words, people can be fired … on account of conduct driv-en by their disability. This is one of the most troubling features of disability law, frankly. Waxman appears to have modified that and opened the door.”

Klimczuk, however, saw an important dis-tinction in the fact that Waxman noted Bos-ton College could have sought to remove Armstrong immediately following his 2002 misconduct. Had it done so, there would have been no discrimination, Klimczuk said.

“But once they decided to rehabilitate in-stead of punish, then they really took on that duty to stick to that rehabilitation approach and not ostracize him,” she said. “I’m not say-ing they necessarily should have fired him, but it’s interesting to note that, if they had, there likely wouldn’t have been a lawsuit.”

Plaintiffs’ lawyer Mark D. Stern of Somer-ville, Massachusetts, said the lesson for em-ployers is that “when you’re dealing with someone with mental health issues, you re-ally need to determine whether you can ac-commodate them or not. And, if you can, you need to follow through on it.”

‘Retaliatory animus’Armstrong worked at the University of

California at Berkeley before joining BC’s chemistry department as an associate pro-fessor in 1992. He was awarded tenure two years later.

With a family history of mental illness and suicide, Armstrong first started show-ing signs of mental problems in 1997, which manifested in a variety of behaviors that impacted his personal life and career.

After Armstrong sent the 2002 emails railing against professor Amir H. Hoveyda, — who, Armstrong was told, thwarted his

application for promotion to full professor —he entered into agreements with BC that documented the terms by which he could return to his faculty position.

He was permitted to return to campus in 2003 following a year-long leave, psychi-atric treatment, administration of psycho-logical tests, and an evaluation by an inde-pendent medical examiner. The agreements further provided for a restricted course load for one year, oversight by a mentor, and a year-long cooling-off period during which his office was to be located outside the chemistry building and he was not allowed to attend faculty meetings.

“Any further restrictions on Com-plainant’s teaching or duties were to be by agreement or based on subsequent con-duct,” Waxman wrote.

Many of Armstrong’s colleagues believed he should have been fired and were upset with the way Boston College handled the situation.

Armstrong’s 2007 MCAD complaint stat-ed that the school and Hoveyda discriminat-ed against him on the basis of his psychiat-ric disability by “refusing to allow him to at-tend Chemistry Department meetings, so-cial functions, and recruitment meetings af-ter his return to campus from a 2002-2003 leave; refusing to allow him to participate in decision-making regarding the purchase of shared departmental instrumentation; tak-ing him off the Chemistry Department email list; taking steps to move his office and lab space out of the Chemistry Building; trans-ferring administrative oversight of his re-search and grant activities to the Biology De-partment; transferring the determination of his salary to the Dean of the College of Arts and Sciences; omitting his name from a 2006 brochure of Chemistry Department faculty; and prohibiting him from teaching courses for chemistry majors.”

The discrimination claim was dismissed by the MCAD as lacking probable cause, and the case proceeded on the retaliation claims.

Stephen Lippard, former chairman of MIT’s chemistry department for 10 years, testified at a hearing before the commis-sion that excluding a colleague from a fac-ulty meeting was “unheard of.” He further criticized the relocation of Armstrong’s of-fice and lab outside the chemistry building.

“According to Dr. Lippard, Complainant’s physical separation from the Chemistry De-partment was ‘devastating’ to him because visibility and presence is necessary in order to attract graduate students, interact with visiting scientists, and weigh in on depart-mental matters,” Waxman wrote.

While Waxman said “[f]aculty members had every right to be offended by and to seek to distance themselves from” Armstrong, she noted that Boston College had made “accommodations allowing Complainant to resume his career notwithstanding his psy-chiatric disability and the hard feelings en-gendered by his aberrant behavior.”

In rejecting BC’s claims that negative ac-tions were taken against Armstrong because he was “disruptive” or that they were other-wise based on non-retaliatory reasons such as space considerations, Waxman cited “numer-ous expressions of retaliatory animus by fac-ulty members” — such as Hoveyda’s threat-ened refusal of the department chairmanship — that established an “inference that a forbid-den bias was present in the workplace.”

She added that the “sentiments expressed by the Chemistry faculty approach, if not constitute, direct evidence of retaliation. At a minimum they combine with the infer-ences set forth above to establish a prima facie case of retaliation” that Boston College failed to refute.

Bipolar professor prevails in bias caseContinued from page 1

Insurer didn’t violate statute

Mark D. Stern, a plaintiffs’ lawyer, said the lesson for employers is that “when you’re dealing with someone with mental health issues, you really need to determine whether you can accommodate them or not. And, if you can, you need to follow through on it.”

Plaintiff ’s counsel rebuffed those sugges-tions, insisting that his client was also enti-tled to $115,000 in pre-judgment interest. When the defense did not accede to his de-mands, plaintiff ’s counsel followed through on a threat to attach the insured’s assets to re-cover the $115,000.

On Aug. 16, the insurer added to its month-old offer of $500,000 plus post-judgment in-terest and court-assessed costs a “carve out,” allowing the plaintiff to continue to pursue a declaratory judgment related to the attach-ment as well as her claim under G.L.c. 176D.

The insurer agreed to stand in for its in-sured, putting itself on the hook for the $115,000 if it lost in the declaratory judg-ment action.

However, on July 26, 2013, the defendant insurer won in U.S. District Court, leaving only the G.L.c. 176D claim to resolve.

Take it to the limitMcDonough said there was a “good faith

disagreement” between plaintiff ’s counsel and the defense over what constituted the in-surer’s policy limits.

Plaintiff ’s counsel “was neither posturing nor negotiating,” the judge said, noting that Al-bano ultimately rejected a formal offer of Hos-pitality’s policy limits when it finally came.

Before trial, Albano offered to settle the case for $300,000, then lowered the demand to $125,000. But once his client prevailed with the jury and the judge on post-trial mo-tions and also secured the attachment, the plaintiff ’s posture from that point forward was “somewhat defined,” Albano said.

“[The defendants] needed to chase the plaintiff; the plaintiff didn’t need to chase them,” he said. “The plaintiff … did not need to bet against herself.”

In his opinion, McDonough credited Alba-no with “zealous advocacy.”

But with respect to the 176D claim, that zealous advocacy helped the defendant prove that it had bargained in good faith.

“Hospitality never tried to settle the case for less than its policy limits, nor was that ever its intent or goal,” McDonough wrote. “Neither did Hospitality then refuse to make a settlement offer.”

The judge concluded that on those facts, “to hold Hospitality in violation of c. 176D would exalt form over substance.”

Continued from page 8

iPad in One Hour for Lawyers

Ideal for attorneys who want to get up to speed quickly, this book gives you the essentials

so you don’t get bogged down in technical jargon and extraneous features and apps.

Go to books.lawyersweekly.com


Providence, Rhode Island, and Boston attorneys Lisa S. Burton and Peter J. Mee.

Overtime assignmentsPlaintiff Gregory Garmon Sr.

was hired by Amtrak in 1997 as a signal helper, and later promoted to electric traction lineman.

Between 2003 and February 2015, the first shift for the Amtrak Electric Traction Department in Providence included Garmon, Christopher Alves and William Butler, both of whom, unlike the plaintiff, were qualified as high rail operators, or HROs.

Amtrak’s collective bargain-ing agreement with the Interna-tional Brotherhood of Electrical Workers provides that overtime “be distributed in conjunction with the duly authorized local committee of the craft or of their representative and the local man-agement. Record will be kept of

overtime worked and men called with the purpose in view of dis-tributing the overtime equally.”

According to the plaintiff, be-ginning in fall 2012, the union al-lowed HROs to fill slots available for HROs. In addition, employ-ees with foreman qualifications could apply for overtime slots designated for foremen. As a re-sult, a foreman could now work overtime, whereas before the al-leged change, a foreman could not have filled that overtime slot unless Garmon, Alves and Butler had first rejected it.

“Garmon asserts that Amtrak engages in discrimination against Garmon (the sole lineman) by making overtime slots available to HROs and foremen, and keep-ing linemen out of the positions (or, more accurately, giving lower priority to linemen for selecting certain slots),” Lisi said.

Amtrak employees were given an opportunity to select overtime

based on their respective shifts, po-sitions and locations. First-shift em-ployees were given preference for first-shift overtime, provided they were qualified for the position post-ed, e.g., a first-shift HRO could se-lect an HRO slot; a lineman could do so only if no HRO had selected the slot first, according to Lisi.

According to the plaintiff, be-ginning in fall 2012, day shift su-pervisor Gregory Brennan began assigning overtime by position as well as shift, which deprived the plaintiff of OT opportunities be-cause he was a lineman.

“If no lineman, HRO, or fore-man selects an overtime shift, a Supervisor or Assistant Supervi-sor (who are qualified for all posi-tions) may elect the shift to ensure sufficient coverage,” Lisi found.

Weekend overtime was staffed by members of the Boston/Prov-idence cost center to cover both cities and to service the connect-ing track.

Because the overtime distribu-tion gave priority to HROs from all shifts for HRO slots and in-cluded foremen in the rotation, the plaintiff ’s opportunities for overtime were reduced.

No prima facie case“Garmon’s claim is predicated

entirely on his contention that, fol-lowing a change in overtime sched-uling, his opportunities for over-time hours decreased,” Lisi said.

“When examined more closely, and undisputed by Garmon, the schedule did not suddenly exclude Garmon from existing slots for overtime work,” the judge found.

Rather, she said, the schedule attempted to ensure that OT was distributed equitably in accor-dance with the collective bargain-ing agreement.

“Essentially, it is not the ex-clusion from overtime opportu-nity that Garmon complains of, it is the inclusion of other em-ployees who have additional

qualifications, like HRO or fore-man, who work on a different shift, or who are primarily locat-ed in Boston,” the judge stated.

“Garmon had fewer opportu-nities to work overtime because he was not an HRO (by his own choice), because he worked first shift, and because he was lo-cated primarily in Providence,” she added.

Lisi found that, notably, Gar-mon offered no examples of be-ing denied a slot for which he had priority.

“Under those circumstances, the Court is of the opinion that, based on the undisputed facts of the case, Garmon has not met his burden to establish a prima fa-cie case because he failed to show that (1) he suffered an adverse employment action and/or (2) there was a connection between his membership in a protected class and the allegedly adverse employment action,” she conclud-ed.

sporting events should not be chilled by the threat of litigation.”

However, that chilling effect is less of a concern “after the whistle blows,” which is when the school and its coach truly failed his client, Reilly said.

Defense counsel John J. Davis of Bos-ton’s Pierce, Davis & Perritano said Krupp’s decision “creates an anomaly” by subject-ing coaches to a higher standard of care for their own players than opponents.

But Robert J. Humm, a member of the sports law group at Adler, Pollock & Shee-han in Providence, Rhode Island, said the judge in Dugan clearly distinguished “the situations of competition between oppos-ing players and coaches on the field,” and a coach’s duty to care for her own players off the field.

“On the field, we want participants to play hard and without fear of being sued for accidentally injuring another player during the heat of a game,” he said.

Off the field, the issue is not competition but a coach’s responsibility for player safety, Humm said. Coaches owe a duty of care to their players to keep them safe, which in-cludes evaluating their capability to step onto the field and compete. That is espe-cially the case in relation to head injuries, he said.

Steven H. Schafer, a Needham, Massa-chusetts, lawyer who handles sports-inju-ry litigation, said he was not surprised the defense in Dugan argued that the higher recklessness standard should apply.

“Defendants always want to extend im-munities beyond their intended purpose,” he said. “Judge Krupp’s decision correct-ly limits the application of the reckless-ness standard to opposing players and coaches for injuries sustained during sports competition.”

A rapidly evolving body of research on the health consequences of concussions prompted the Legislature to pass what be-came G.L.c. 111, §222 in 2010. The law re-quires anyone involved in extracurricular competition conducted under the auspices

of the Massachusetts Interscholastic Ath-letic Association to undergo head-injury safety training.

By fall 2011, regulations were in place mandating that students who had sus-tained head injuries be removed from prac-tice or play immediately, and cleared by a licensed trainer or medical professional be-fore returning to the field, court or rink.

By now, all players, coaches and parents

should be aware of the dangers of concus-sions, given how publicly the NFL has been grappling with the issue, Schafer said.

“The NFL’s admission last year that foot-ball players suffer a high rate of severe brain damage from recurrent concussions should have served as a wake-up call to coaches, trainers and athletic directors at all levels who missed the growing medical evidence on this public health hazard,” he said.

Krupp noted in his opinion that while Thayer Academy was not required to ad-here strictly to the state regulations, the school did have a “concussion management protocol” that “called for the involvement and evaluation by a primary care physi-cian, notification of parents, and action by an athletic trainer or nurse.”

If, as the plaintiffs claim, Thayer neglect-ed its own protocol, that could spell trouble for the defendants, said Boston personal in-jury lawyer Peter V. Belotti.

“Even without that policy, a negligence standard should apply to a coach or school

because of the unique position a coach is in,” he said.

No communicationPlaintiff Amy Dugan suffered an initial

head injury in an Oct. 7, 2011, field hockey game in Concord, New Hampshire.

According to Dugan, the coach saw a ball strike her in the head but did not attempt to determine whether she had suffered a con-cussion or other injury, and did not remove

her from the game. Dugan attended the team’s practice four

days later despite the fact that she had not been evaluated by, or received clearance from, a licensed medical professional.

On Oct. 12, the coach put Dugan on the field, where she collided with an opponent and was struck in the head.

The coach allegedly witnessed the injury but again did not try to determine wheth-er Dugan had suffered an injury as a result and did not remove her from the game.

Neither Dugan’s parents nor school offi-cials were notified about the injury, accord-ing to the complaint.

Defense counsel Davis, however, said that once all the facts have been presented, they will tell a much different story.

“Thayer Academy takes athletic injuries very seriously and does not unnecessarily put players’ health or well-being at risk,” he said. “They do have a concussion-manage-ment protocol; [her coach] was well trained in it and followed it in this case.”

Opposing parties, opposing precedents

Krupp noted that the parties had each sub-mitted to him prior Superior Court decisions “reaching opposite results.”

The defendants offered Capua v. Town of North Reading, in which Judge Howard J. Whitehead applied a recklessness standard to a case involving a female goalie injured in a scrimmage between the girls and boys high school teams.

Whitehead reasoned that the school officials and coaches “were analogous in function to the nonprofit association, an organizer and spon-sor of athletic events” that Judge Peter W. Ag-nes Jr. had subjected to a recklessness standard in Goodwin v. Youth Sports Association.

The plaintiffs, meanwhile, supplied Torres v. University of Massachusetts, in which a cheerleader was “injured while practicing a high-risk move without adequate spotters.” Judge Thomas P. Billings eschewed the ratio-nale of Gauvin and Kavanagh v. Trustees of Boston University, “because the plaintiff ‘was not engaged in competition at the time of her accident,’ and because ‘the supervision she advocates would not interfere with the activity she was engaged in, even had it been at a game or a cheerleading competition.’”

“Judge Billings did not read the Supreme Judicial Court to be ‘suggesting that willful-ness, wantonness or recklessness must be shown in every accident that takes place in or around a sporting event,’” Krupp wrote.

Krupp added that he agreed with Billings’ reading of the SJC decisions.

“Simply because the alleged tortious con-duct occurred in connection with the con-duct of a sport does not mean the reckless-ness standard must apply,” he wrote. “This case fundamentally involves allegations in-volving failure to obtain medical evaluation and care, not the manner and means of com-petition. Nothing in the heat of competition should release a coach of the obligation to as-sure a player’s fitness to engage in the partic-ular type of competition or to secure medi-cal assistance as may be needed. Nor should a coach be relieved of the duty to use ordinary care in the sober evaluation between games of whether a player is fit to take the field.”

Loss of overtime no basis for racial discrimination complaintContinued from page 1

Injured player can bring suit against coach, private schoolContinued from page 1

In a footnote, Judge Peter B. Krupp noted that even if the statute “does not apply to Thayer [Academy] … or does not establish an independent cause of action for its violation … the statute likely affects the duty of care a coach owes to her players to pre-vent head trauma.”

⸀⸀⸀

⸀⸀⸀⸀⸀⸀⸀⸀⸀⸀⸀

⸀⸀⸀⸀

䔀䴀倀䰀伀夀䔀刀䌀伀唀一匀䔀䰀䤀一䜀

䰀䄀䈀伀刀刀䔀䰀䄀吀䤀伀一匀

䔀䴀倀䰀伀夀䔀刀吀刀䄀䤀一䤀一䜀

䠀䤀䜀䠀䔀刀䔀䐀唀䌀䄀吀䤀伀一

䰀䤀吀䤀䜀䄀吀䤀伀一

一伀一䌀伀䴀倀䔀吀䔀䰀䄀圀

Documents

Pre-Sorted Standard US Postage Paid Boston, MA Permit No