It’s time for spring cleaning — out with the old; in with the new. Let’s clear out the legal closet; we’ll make room for new developments and send outdated theories out with the trash.
First up is a key point in Texas noncompete law. On April 9, the Texas Supreme Court announced it would decide whether money can constitute consideration for a noncompete. It granted a petition for review in Marsh USA, Inc., et al. v. Cook , in which the 5th Court of Appeals in Dallas had held that stock options given to an executive were insufficient consideration for a noncompete and that only confidential information cuts the mustard.
The petition for review filed by Marsh argued: The holding was too restrictive; giving money to an employee leads him to work harder; hard work creates customer goodwill; and an employer should be able to protect that goodwill by means of a noncompete.
Cook’s response to the petition for review cuts to the meat of the coconut: That “argument would allow an employer to impose on an employee a covenant not-to-compete in exchange for any benefit the employer provides to incentivize the employee to work hard and build the company.”
Marsh is about values. In one corner is the Texas value of allowing an individual to make his way in the world with as few restraints as possible; in the opposing corner is the Texas value of promoting business and giving the individual the freedom to make a deal, such as exchanging money for a noncompete. If the Supreme Court sides with the employer, it will change the employer/employee relationship in Texas in a big way, with repercussions at which lawyers can now only guess.
Speaking of values, lawyers need to remember that judges’ values animate their legal decisions. Senators will ask questions about the role of values in the confirmation hearing for Justice John Paul Stevens’ replacement. Judges do not decide cases in the abstract nor do they shed their previous predilections once they ascend the bench.
Two retaliation cases at the U.S. Supreme Court will illustrate this dynamic. They justices are scheduled to hear one and are considering hearing the second. Decisions in both will come down to a value judgment: Should courts read the anti-retaliation provisions in U.S. laws broadly or narrowly?
Up first, Kasten v. Saint-Gobain Performance Plastics Corp. , a decision by the 7th U.S. Circuit Court of Appeals in 2009. According to the 7th Circuit’s opinion affirming summary judgment for the employer, an employee complained he was not being paid for donning and doffing equipment needed to perform his job; he later was terminated. The Fair Labor Standards Act forbids retaliation against employees who file a complaint. Well, what does “file” mean? The 7th Circuit reasoned that it did not mean an employee must file a complaint with a government agency; an internal company complaint can constitute protected activity. But the 7th Circuit also held that the complaint to the employer must be in writing — not just verbal — because the court had to give the word “filed” some meaning.
The case the court is thinking about hearing is Thompson v. North American Stainless LP , decided by the 6th U.S. Circuit Court of Appeals in 2009. According to the 6th Circuit’s opinion, an employee engaged in protected activity, namely, filing a claim of gender discrimination with the EEOC. Three weeks later, her fiancée, who also worked for the same company, was fired. Is he protected by Title VII’s prohibition against retaliation? On one hand, he did not engage in protected activity; that counts against protection. On the other hand, the statute’s language protects those “aggrieved” by retaliatory conduct, not just those who engage in protected activity. A sharply divided, en banc 6th Circuit adopted the first interpretation and sided with the employer. The high court has invited the Office of the Solicitor General for its views on the issue. Stay tuned.
Values will drive decisions in these three cases. All legal decisions are value-driven. First comes the value, then the reasoning.
To the Trash
As part of spring cleaning, it’s important to take a hard look at some legal theories. Here is one: the equal-opportunity-jerk defense. It’s the idea that if managers are jerks to everyone, no legal liability can attach. That’s kind of hard to swallow, no?
It was for an en banc 11th U.S. Circuit Court of Appeals this year in Reeves v. C.H. Robinson Worldwide Inc. , which reversed the trial court’s grant of summary judgment for the employer. According to the 11thCircuit’s opinion, the plaintiff claimed co-workers called both men and women “bitches” and “whores,” and a manager tolerated the conduct.The employer argued that this identical treatment precluded a finding of a sexually hostile work environment.
The court disagreed: “It is undeniable that the terms ‘bitch’ and ‘whore’ have gender-specific meanings. Calling a man a ‘bitch’ belittles him precisely because it belittles women. It implies that the object of ridicule is a lesser man and feminine, and may not belong in the workplace.” So, the 11th Circuit ruled that the jury can use comments made to both genders to determine if a sexually hostile workplace exists.
The law is not static. It moves and morphs. Next year’s spring cleaning will be so different from this year’s. That’s the beauty of the law, isn’t it?
Michael P. Maslanka is the managing partner of Ford & Harrison’s Dallas office. He is board certified in labor and employment law by the Texas Board of Legal Specialization, and he writes the Texas Employment Law Letter. His “Work Matters” columns, blog and podcasts can be found at www.texaslawyer.com. He is on Twitter at www.twitter.com/worklawyer. His e-mail address is firstname.lastname@example.org.
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