Introduction
Our company, here in referred to as Greene’s LLC, is suing Jennifer Lawson, a former employee for breaching a confidentiality agreement signed during the course of her employment and subsequently breached after being dismissed from the company. Jennifer Lawson has subsequently countersued Greene’s LLC for wrongful termination.
The substance of the matter is that Jennifer Lawson was summarily dismissed from the company by the HR officer Lisa Peele. Lawson subsequently went on to seek employment from a competitor, Howell Jewelry World, a competitor to Greene’s LLC. The bone of contention for our company is that in the process, Lawson passed on a draft letter addressed to our attorney. The letter contained information on the company’s trade secret: the process of creating synthetic gold for Greene’s trademark product Ever-Gold. Subsequently, the company is suing Lawson for breach of contract. On the other hand, Jennifer Lawson has countersued for wrongful dismissal.
Following a review of the cases brought before the court with regard to the matter, I am of the view that Greene’s LLC has a strong case. This is as a result of a number of issues discussed henceforth. First, Greene’s LLC generally requires that its executives sign both a confidentiality agreement as well as a covenant not to compete during or after the course of employment. In this case, Jennifer Lawson only signed the confidentiality agreement. As a result, filing a case to contest her duty courtesy of the confidentiality agreement only rather than both sets of agreement serves to boost the case. It is especially so considering that issues involving competition can easily be further contested to our disadvantage.
Secondly, there are numerous judicial precedents that illustrate dismissal from employment does not create course for the dismissed employee to disregard confidentiality agreements. The assertion stands regardless of the nature of dismissal that has taken place. That view is further strengthened by the need for both parties in an employment relationship to be bound by either an express or implied duty of good faith (Coper, 2007).
There is also the “At will presumption” provided/implied by the labor laws in the U.S. As a result, the “at will presumption” provides a leeway for sudden dismissal without being mandated to show any due cause. In this regard, Greene’s LLC Human Resource Manager (Lisa Peele) did not err in summarily dismissing Jennifer Lawson. Provisions under the country’s labor laws also spell out the various circumstances under which wrongful dismissal can be substantiated. As will be evaluated later in the memo, there is no sufficient cause to illustrate that the company breached any of the provisions that result in wrongful dismissal.
Facts and Laws
The view of the company is that there is a specific set of situations that must be achieved for wrongful dismissal to alleged and prosecuted. For the case brought on by Jennifer Lawson, the company however feels that the substance of wrongful dismissal cannot be brought forward. Labor laws hold that for wrongful termination to affirmed, the following situations should occur in their entirety or individually. First, there should be discrimination on the basis of sex, religion, race, or in some instances pregnancy (United States Department of Labor, 2016).
The company is of the view that the summary dismissal of Lawson was not as a result of the above-mentioned discriminatory attributes. This is despite the fact that Jennifer Lawson had revealed to Lisa Peele, the HR manager, that she was pregnant. This is because her role as a junior executive secretary cannot be classified as labor intensive hence pregnancy cannot be viewed as a factor that constrains her from undertaking her duties in any way other than the mandatory maternity leave provided for by the law.
The second substantive issue that might affirm wrongful dismissal proceedings is retaliation as a result of an employee raising a complaint or being part of an investigation that targets the case (United States Department of Labor, 2016). For this case, the substantive facts at hand indicate that Lawson had not raised any complaint against the company as an employer neither was she part of any investigation. As a result, the provision cannot be viewed to constitute any grounds for unlawful termination in this case (HG Legal resources, 2016).
The other issue that may result in wrongful termination proceedings is the forcing of an employee to commit an illegal act on behalf of the company (United States Department of Labor, 2016). It is evident from the facts of the case that this was not the case. Wrongful termination can also be affirmed in the event that the employer did not follow the procedures in their employment policy with regard to hiring and dismissal of employees.
However, in the absence of an employment contract that expressly touches on this issue, it becomes clear that an employment policy cannot be used as a threshold for bringing up unlawful termination proceedings. It is also the case that an employer handbook cannot be legally held to replace an employment contract hence its existence or the lack of it in this is immaterial. Secondly, the laws of the land expressly and implicitly provide for the “At will presumption” in which the employer has a leeway to summarily dismiss an employee without having to show due cause (HG Legal resources, 2016).
The case also brings to fore issues with regard to contract law. In the abstract sense, a contract can either be written or implied (McAdams, 2012). With regard to this case, contracts may be viewed in numerous perspectives. The first is that Greene’s LLC, by virtue of having employed Jennifer Lawson, entered into an employment relationship with her. Consequently, there is existence of a contract - whether or not it was expressly written. An employment relationship requires - whether implicitly or in writing - that both parties should always act in good faith unless otherwise as permitted by a contract (Moots, 2011). It is the view of the company that Jennifer Lawson did not act in good faith.
However, the substantive matter in this case is made easier by the fact that there was an express contractual agreement between Greene’s LLC and Jennifer Lawson. The contractual agreement in this case is in the form of the confidentiality agreement that Lawson signed upon commencing her employment in the company. While most contractual agreements are broad (Moots, 2011), the contractual agreement with regard to the case is specific; an executive employee of the company cannot divulge trade secrets to a competitor. Consequently, the company is of the view that Jennifer Lawson did not fulfill her contractual obligations.
An evaluation of the case illustrates that the two primary issues being covered touch on contracts and employment. As a result, there are a number of laws that will subsequently be revoked during the course of the court proceedings. Below is an evaluation of the laws likely to be invoked during the process. The Civil Rights Act of 1964 seeks to eliminate discrimination including in the work place. The discrimination being covered extends to factors such as sex discrimination, which has often been defined contextually to include pregnancy related discrimination. Given that Jennifer Lawson was pregnant at the time of her summary dismissal, the Civil Rights Act of 1964 is therefore likely to be brought forward by Jennifer Lawson’s defense team.
The Worker Adjustment and Retraining Notification Act (WARN) of 1988 is also one of the laws that will be invoked. Interpretation of the law will be in favor of the company. This is because despite employment in the U.S. being generally on an “at will” basis, the WARN Act places some restrictions. The law provides that in the event that a company intends to lay off more than fifty employees at once, it should give a minimum of a sixty day notice.
However, the facts before the case illustrate that no such situation was contemplated by Greene’s LLC (since the nature and extent of downsizing was not defined by Lisa Peele the HR manager). Consequently, Jennifer Lawson was not entitled to any notice and as such her summary dismissal cannot be held to be unlawful.
The case also involves the issue of trade secrets which inadvertently has an element of contractual obligation. Trade secrets create an implication that both parties (employer and employee) are bound to protect a trade secret. In this regard, the Uniform Trade Secrets Act will also be invoked during the process of this court proceeding.
Precedent
One of the primary case laws with regard to employment relations as is the case with case is the Magnan v. Anaconda Industries, Inc. Magnan, who had previously been an employee of Anaconda industries, had been summarily dismissed as a result of what was termed as a breach of loyalty (Edwards, Robinson, & Pattanayak, 2012). This is as a result of the fact that Magnan failed to prevent theft in the company at a time when he was in charge. Magnan held that in doing so, the employer did not apply the doctrine of good faith and as such his dismissal was unlawful.
However, the court ruled in favor of Anaconda industries holding that the concept of good faith while forming a threshold for determining unlawful dismissal was an amorphous concept and as such could not be applied legally without it being challenged. Consequently, the court held that an employer does not require having good cause in order to dismiss an employee. Such judicial precedents serve to support the company’s position that Jennifer Lawson was not wrongfully dismissed.
The second case is the Black v. Baker oil tools, Inc. Black, working for Baker oil tools, suffered from two heart while the working for the company. Consequently, the company dismissed him. Black filed a lawsuit against the company, alleging that at the time of being employed, the company offered him a supervisory manual which Black held constituted an employment contract (Case text, 2016). The court rejected that opinion and proceeded to offer the company a motion to dismiss the worker. The case removes any doubt as to whether or not Greene’s LLC should be held liable for the unlawfully dismissing Jennifer Lawson.
In the case of Christou v. Beatport, LLC, the court held that MySpace (a social media website) profiles constitute trade secretes under the Uniform Trade Secrets Act (Edwards, Robinson, & Pattanayak, 2012). In its judgement, the court held that while some of the information contained in the website such as friends’ lists may be public, additional information on such lists may be held as a trade secret and as a result, passing on such information could be considered a breach of the Uniform Trade Secrets Act.
The judgement implies that an individual who passes on such information is liable under the Uniform Trade Secrets Act. The case law therefore serves to support Greene’s LLC assertion that Jennifer Lawson’s act of passing on the information to Howell Jewelry World is an infringement of the law and that she should be held liable for the same.
Facts to be Determined
In evaluating the case, there are a number of factors to be taken into consideration. In doing so, a number of questions that are pertinent in addressing the considerations come up. The questions include:
Does termination of employment - whether lawful or otherwise - relieve the affected employee of their contractual obligation as conferred by a confidentiality agreement?
What constitutes wrongful employment termination?
Does the component of good faith arise only after Jennifer Lawson is sued by the company and not before?
It is important to determine whether or not termination of employment relieves the affected employee of the need to continue abiding by their contractual agreements, especially with regard to trade secrets. The concept of confidentiality in an employment relationship is dependent on a number of components that include the nature of employment, attitude of an employer, as well as the nature of information being protected. For this case, it is evident that the nature of information being held is a trade secret. This is by virtue of the fact the Jennifer Lawson used this information as leverage in gaining employment at the Howell Jewelry World.
The very nature of a contract - whether written or implied - is that it serves to moderate certain factors within the relationship. In this case, the issue being moderated is that of protecting the company’s trade secret. It is the view of the company, as is the case with that of numerous other judicial precedents, that termination of an employment contract does not relieve one of their obligations under a confidentiality agreement. The primary reason for this assertion is that an injustice cannot be cured by another injustice.
In the event that Jennifer Lawson felt aggrieved by the decision of Lisa Peele, the HR manager, to relieve her of her duties, she should have resorted to proper legal action immediately (suing for wrongful dismissal) rather than proceeding to pass on the company’s trade secrets to a competitor.
The law, in providing for confidentiality agreements, defines the obligations inherent under confidentiality. The aim of providing for the obligations is to provide a balance between the various conflicting interests that may arise among the various players involved in the agreement.
One of the obligations is that the confidentiality agreement should not prevent the employee from making use of their knowledge after leaving the employ of the current manager. To this end, it is clear that even in the event of her dismissal, Jennifer was still free to exercise her knowledge in so far as she did not trade any secrets belonging to the company. It may therefore be argued that it is Lawson who breached the duty of good faith incumbent upon her by virtue of having had both an employment relationship with Greene’s LLC as well as having signed a confidentiality agreement.
It is further the case that Lawson did not appear to have any intention to sue the company for the alleged unlawful dismissal and only proceeded to do so after the company had brought proceedings against her with regard to the issue of breaching a confidentiality agreement. The optics of such a move are such that Lawson was all along not acting in good faith as inadvertently obliged by virtue of her having signed the confidentiality agreement.
Another obligation incumbent upon confidentiality agreements is that they must take into the account the interest of the state in ensuring that there is free commerce. An abstract evaluation of the obligation would then imply that Lawson did not error in passing on the trade secrets to Howell Jewelry World.
However, the issue cannot be viewed in such simplicity. The Uniform Trade Secrets Act provides that a trade secret is one which derives an economic value for an individual or organization and whose release to the public or other entity may constitute grievous harm to the affected individual and/or organization. The law goes on to further state that the information constituting a trade secret can be in the form of a published document. The draft letter addressed to Greene’s LLC attorney that was used by Lawson to pass on the information constituted a published document.
It is therefore evident that whichever the angle, Jennifer Lawson, by passing on the information, broke a confidentiality agreement. To the extent that the need for confidentiality was a result of a trade secret, it is evident that she was in contravention of the Uniform Trade Secrets Act over and above being contractually liable. It is therefore the case that she is liable to pay damages to Greene’s LLC.
On the counterclaim by Jennifer Lawson that she was unlawfully dismissed, an evaluation of various factors, case laws, and laws reveals that that is not the case. The threshold for wrongful termination in the country is very high. It is as a result of the “at will” provisions of the labor laws. The provision gives a freehand to employers to summarily fire employees without having to show any due cause. The provision is restricted by provisions of the Worker Adjustment and Retraining Notification Act (WARN) of 1988, which mandates a notice in the event that over fifty employees are being laid off; a condition not yet attained by Greene’s LLC.
Application of Law to Facts
There is a high likelihood that the company will win the case on both fronts. This is primarily as a result of the lax labor laws including the “at will” provisions as well as the high threshold for notices created by the WARN Act. This is illustrated in the Black v. Baker oil tools, Inc case.
It is also the case that there is an express law (Uniform Trade Secrets Act) that prohibits the passing on of trade secrets. From the division of trade secrets, the Ever-Gold ingredients qualify as trade secrets. Further strengthening the case is the existence of a written confidentiality agreement signed by Lawson and whose breach triggers a call for damages by the company.
However, Lawson’s defense is likely to bring up the issue of unlawful dismissal courtesy of Article VII of the Civil Rights Act. The law prohibits discrimination on numerous bases including sex. There has been judicial precedence in which the provision for discrimination on the basis of sex has been extended to cover discrimination on the basis of pregnancy. Given that Jennifer Lawson was pregnant at the time of her dismissal, the defense will seek to take advantage of provisions of the Civil Rights Act to the disadvantage of the company.
Impact Assessment
The public perception of Greene’s LLC is likely to be affected by virtue of its secret value (whether tweaked or not) being associated with a disfiguring rush suffered by one of Howell Jewelry World customers. Secondly, regardless of the facts, Jennifer Lawson may draw sympathy from the public by virtue having been sacked at a time when she was pregnant. This will spoil the company’s public image.
References
Coper, C (2007). The Basics Of Employment Contracts. American Bar Retrieved January 12,
2017 from
http://www.americanbar.org/content/newsletter/publications/law_trends_news_practice_a
rea_e_newsletter_home/0705_litigation_employmentcontracts.html
Edwards, K., Robinson, S., & Pattanayak, C (2012). Labor and Employment Law: A Career
Guide. Cambridge, MA; Harvard Publishers
HG Legal resources (2016). Wrongful Termination Law. Hg.org Retrieved January 12, 2017
McAdams, K (2012).Law, Business, and Society. New York, NY; McGraw-Hill Education
Moots, F (2011). Principles of American contract law. University of Nevada Retrieved January
12, 2017 from http://www3.uninsubria.it/uninsubria/allegati/pagine/1438/Prof_Mootz.pdf
United States Department of Labor (2016). Equal Employment Opportunity. Dol.org Retrieved
