Can You Fire or Get Fired for Statements on Facebook, etc.? (Social Media – Part II)

In the last couple of years, many employers have been adding Social Media policies to their Employee Manuals, often prohibiting employees from discussing all company matters publicly or from disparaging managers, co-workers, or the business itself online.  A violation of these policies has often been cited as a firing offense.  The question is how enforceable are these policies and how far can an employer go in regulating what its employees are saying about the business or the working conditions on sites such as Facebook or Twitter?

Thankfully, several opinions and memorandums issued by the National Labor Relations Board (The Board) provide some very useful guidance.  Here’s a quick summary of do’s and don’t of social media for both employers and employees:

1.  Discussions of working conditions, wages, or benefits are protected.  Under Section 7 of the National Labor Relations Act, all employees (not only the ones unionized)  have the right to “engage in … concerted activities for the purpose of collective bargaining or mutual aid or protection.” The Board considers that any social media policy that discourages workers from exercising their right to communicate with one another with the aim of improving wages, benefits or working conditions, are likely to be in violation of Section 7.

For example, in Hispanics United of Buffalo Inc. and Carlos Ortiz, 03-CA-027872, several employees posted angry comments criticizing one of the other employee’s statements that they were not doing their work.  All five were fired.  The Board ordered their reinstatement and held that the employees were united by common cause, and engaged in a concerted activity for the “purpose of mutual aid or protection” as allowed by Section 7.”

2.  Personal venting or rants are NOT protected. The Board has previously found that an employer can fire an employee for offensive and inappropriate Twitter postings that do not involve protected concerted activity.  See The Board’s Advice Memorandum to Arizona Daily Star, 28-CA-23267.  In this case, a police reporter kept making distasteful comments about Tucson’s homicide rates, criticized another department at his newspaper, and called other media people “stupid” – all from his Twitter account linked to Arizona Daily Star.  The Board found that the employee’s “conduct was not protected and concerted: it did not relate to the terms and conditions of his employment or seek to involve other employees in issues related to employment.”  Thus, the newspaper was within its rights to fire him.

3.   Disclosure of confidential information or trade secrets is NOT protected.  An employer can prohibit employees from disclosing company’s trade secrets in social media.   However, employees still retain the right to discuss their wages, workplace conditions, or employees’ or company performance under Section 7. See Point 1 above.

4. Prohibition of colorful language, expletives, distasteful remarks (also known as “Courtesy Clause”) is unlawful.  The Board has held that courtesy clauses violate the National Labor Relations Act because they may be construed to restrict employees’ rights to publicly criticize their employer.  See Karl Knauz BMW, Knauz Auto Group, 13-CA-046452.  Therefore, while, an employer might find some of its employees’ comments distasteful or rude, as long as such comments are part of a concerted activity, they are lawful and cannot be used as grounds for termination.

5.  Employee opinions are protected even if factually wrong.  The Board’s view is that as long as the purpose of a social media discussion is to come to a collective understanding or action, employees should be able to express their opinions, even if their statements are not entirely factually correct.

6.  Harassing, violent, abusive, or malicious statements are NOT protected.  Employers always retain the right to prohibit sexual harassment, workplace violence and threats of violence, and abusive or malicious activity, and should include such clause in their social media.  However, the clause should be narrowly drafted so that it does not discourage or “chill” the protected activity.

BOTTOM LINE for Employers:

1.   Have a written social media policy. Some examples can be found here.

2.  Make sure the policy is narrowly drafted and does not prohibit or discourage the employees’ right to discuss their work conditions, wages, and benefits or engage in other concerted activities.  Use the memorandums issued by The Board as your guide.

BOTTOM LINE for Employees:

Keep in mind that Texas is an at-will state of employment, which means that an employer can fire an employee at any time, for any reason (except an illegal one). Posts that are not related to the place of employment or work duties, are not protected under Section 7 and can be used by an employer as a lawful cause to fire an employee.

For my previous post regarding Social Media, click here.

For more information, contact Leiza Dolghih.

Facebook – It’s not Just for Fun Anymore (Social Media – Part I)

During 2012, the country has been abuzz with dozens of statutes and cases dealing with social media (Facebook, Twitter, Linked-In., etc.) A new body of law is emerging, and unless you’ve kept close tabs on it, it can be very confusing, especially, considering that different states and different jurisdictions treat some of the same issues quite differently.

I expect that we’ll see an exponential increase in cases dealing with social media in 2013, which is why I would like to dedicate the next several posts to discussing where Texas currently stands on social media legal issues, in comparison to other jurisdictions.

As far as legislation is concerned, Texas is currently trying to catch up with some other states that have already passed statutes dealing with social media.

Senate Bill 118 – A Proposed Amendment to the Labor Code 

Last January, Texas senator Juan Hinojosa (D-Corpus Christi – McAllen) introduced a bill that would make it unlawful for employers to require or request that an employee or applicant for employment “disclose a user name, password, or other means for accessing a personal account or the employee or applicant …”

If Texas passes Senate Bill 118, it would join four other states – California (A.B. 1844), Illinois (H.B. 3782), Maryland (H.B. 964/S.B. 433), and Michigan (H.B. 5523) – that have already enacted similar legislation last year.

Additionally, California (S.B. 1349), Delaware (H.B. 309), Michigan (H.B. 5523), and New Jersey (A.B. 2879) have prohibited higher education institutions from requiring their students to give up their passwords.

Several other states have introduced similar bills in 2012 and 2013, but have not yet passed them: Massachusetts (H.D. 4323), Minnesota (H.F. 2963), Missouri (H.B. 2060), New York (A.B. 9654), Ohio (S.B. 351), Oregon (H.B. 2654), Pennsylvania (H.B. 2332), South Carolina (H.B. 5105), and Washington (S.B. 6637).

Finally, in February, several house representatives in U.S. Congress reintroduced the bill (H.R. 537) titled “Social Networking Online Protection Act” (SNOPA), which would prohibit employers and higher education institutions from requiring their employees and students’ social media passwords.

2.   HB 1989 – A Proposed Amendment to the Texas Civil Practice & Remedies Code

This month, Texas state representative Jeff Leach (R-Plano) proposed a bill that would allow sheriffs, process servers and other legal entities the right to serve legal papers over social media accounts, including Facebook.  As currently drafted, the bill would become effective on September 1, 2013.

If Texas House Bill 1989 is enacted, it would make the Lone Star State the first in the United States to allow for service of process via social media as an alternative means of service.  The courts in other jurisdictions have already found such service to be valid in certain circumstances.  For example, the Southern District Court of New York in Federal Trade Commission v. PCCARE247, Inc., found that service via Facebook was acceptable as long as the serving party could establish that the Facebook account indeed belonged to the person/entity being served.  Outside the United States, Australia, Canada,  New Zealand, and United Kingdom have all allowed service via Facebook or Twitter.   Texas could be next.

UPDATE (July 2013):  The Legislative Session ended on May 27, 2013.  HB 318/SB 118 was passed by the House, but then died.  HB 1989 was not passed by either chamber.

For more information, contact Leiza Dolghih.

Quick Recap of 2013 Tax Changes

Several key tax provisions took effect on January 1, 2013, as part of the American Taxpayer Relief Act of 2012:

Tax Rate Increases

  • Top long term capital gains and qualifying dividends tax rate increased from 15% to 20% – or 23.8% if you include the new 3.8% Medicare tax on investment income (this is a 59% increase).
  • The estate and gift tax exclusion was retained at $5+ million (indexed for inflation), but the top estate and gift tax rate was increased from 35% to 40%.

New Medicare Surtax 

  • Earned income (wages & self-employed income) in excess of $200,000 (for single people) and $250,000 (for married couple) will be subject to 0.9% Medicare tax.
  • Investment income of taxpayers whose Adjusted Gross Income is over $250,000 (for joint filers) will be subject to the new 3.8% Medicare surtax.
  • Taxable gains on residences (gains over $250,000 for individuals and $500,000 for joint filers) will also be subject to 3.8% Medicare surtax.
  • Employer’s part of the Medicare tax remains unchanged.

Other

  • The Section 179 expense deduction for 2013 is $500,000 and additional 50%  first-year bonus depreciation.  These deductions, however, are scheduled to be greatly reduced in 2014.
  • The gift tax exclusion per person increased to $14,000.

For more information, see KPMG’s website here or contact Leiza Dolghih.

The U.S. Supreme Court Renders A Pro-Business Class Action Ruling

Today, the U.S. Supreme Court rendered a decision that should make any business owner facing a class action breath a little easier.   The Court’s decision in Standard Fire Insurance Co. v. Knowlesmakes it easier for defendants to move class actions from state courts to federal courts, which are generally known to be less favorable to plaintiffs and which provide less of a home-court advantage to plaintiffs’ lawyers when it comes to recovery of attorneys’ fees associated with class actions.

Under the Class Action Fairness Act (CAFA), any class action with aggregated damages over $5 million dollars, can be brought in federal court.  To avoid being in federal court, plaintiffs often allege that they are seeking damages of less than $5 million.   Following the usual practice, the named plaintiff in Knowles submitted an affidavit stipulating that the class members were not going to seek at any time during the case damages exceeding $5 million.  The plaintiff then argued that the federal court had no jurisdiction over the case because of the stipulation, even though absent the stipulation the damages would have exceeded the threshold amount.

The U.S. Supreme Court held that such stipulation was not enough to defeat the transfer of the case from the state to federal court and that the federal court had to assess for itself whether the damages exceeded the CAFA threshold.  The Court reasoned that the stipulation did not guarantee that the damages would stay below $5 million because the named plaintiff could not legally bind prospective class members to a certain amount in controversy before the class was certified.

Sure, the Court clarified that a stipulation that is binding on all class members can be sufficient to avoid a transfer to federal court.  However, from a practical stand point, this means that a plaintiffs’ attorney would have to certify the class first, then file a stipulation, and then transfer the case back to the state court, which at that point – months or even years after filing the case in federal court – might be impossible or impractical to do, or simply not worth it.

For more information, contact Leiza Dolghih.

Non-Compete Agreements in Texas: The Devil is in the Details

Last week, the Fifth Court of Appeals of Texas in U.S. Risk Insurance Group, Inc. et al. v. Woods reminded us again that a non-competition agreement must be reasonable and must include a correct entity, or it will not be enforceable.

In Woods, an insurance broker signed an Employment, Confidentiality and Non-Compete Agreement (Agreement) when he began working for U.S. Risk Brokers, Inc. (USR).  Although Woods was working for and soliciting insureds on behalf of USR, the Agreement was between Woods and USR’s holding company – U.S. Risk Insurance Group, Inc. (USRIG). USR was not a party to the Agreement.

The Non-Competition provision in the Agreement stated the following:

Additionally, for a period of ninety (90) days after the last day of Employee’s employment following Employee’s voluntary resignation from the Company provided that the Company elects to continue the Employee’s salary during the ninety (90) day period, Employee agrees that Employee shall not become associated with, employed by, or financially interested in any business operation which competes in the business currently engaged in by the Company or any of its subsidiaries or affiliates.  The phrase “business currently engaged in by the Company” includes, but is not limited to, the types of activities in which the Company was engaged during Employee’s tenure .

When Woods resigned and went to work for a USR’s competitor, USR filed a lawsuit against him alleging the breach of the Agreement.

The Fifth Court of Appeals found that the Non-Competition provision was unenforceable against Woods because it was unreasonable as to the scope of the restrained activity.  Not only did it prohibit Woods from engaging in the type of business activity that he had performed for USR, but it prohibited him from engaging in any business that USRIG, the holding company, engaged in.

The Court of Appeals also held that the non-solicitation clause in the Agreement was unenforceable by USR because the Agreement was between USRIG and Woods, and USR was not a party.   Thus, because the non-solicitation clause only prohibited Woods from soliciting “insureds” of USRIG, he was free to solicit any customers of USR.

CONCLUSION:  When drafting or enforcing a non-compete in Texas, remember these simple rules:

1.  The limitations as to time, geographic area, ans scope of activity restrained must be reasonable.

2. When applied to personal services occupation, a restraint on client solicitation is overbroad and unreasonable if it extends to clients with whom the employee had no prior dealings during his employment.

3. An industry-wide bar is unreasonable.

4. Make sure the non-compete agreement is with the correct entity or the entity is defined broadly enough to include its affiliates who employ the covered employees.

For more information, contact Leiza Dolghih.

Whistleblowing – The Right and the Wrong Way to Do It

The Texas Whistleblower Act protects public employees who make good faith reports of violations of law by their employer or co-workers to an  “appropriate law enforcement authority.”  Under the Act, an employer may not suspend or terminate the employment, or take other adverse personnel action against, a public employee who makes a report under the Act.

The Texas Supreme Court recently ruled that an “appropriate law enforcement authority” does not include employee’s supervisor, even if that supervisor ensures internal compliance with the law within the organization.  Thus, while “[o]ther states’ whistleblower laws accommodate internal reports to supervisors; Texas law does not.”  In that regard, the Texas Whistleblower Act is very similar to the Dodd Frank Wall Street Reform and Protection Act, which also requires employees to make reports to an external entity, rather than internally.

In University of Texas Southwestern Medical Center at Dallas v. Larry M. GentilelloDr. Larry Gentilello, a professor of surgery at the University of Texas Southwestern Medical Center at Dallas, had complained to his supervisor, Dr. Robert Rege, that trauma residents in Parkland Hospital in Dallas were treating and operating on patients without an attending physician’s supervision, in violation of Medicare and Medicaid requirements and procedures.  After Dr. Gentilello was stripped of his faculty chair positions, he filed a whistleblower suit that alleged that the demotion was in retaliation for reporting the center’s violation of federal rules.

The Texas Supreme Court reasoned that just because the department chair could discipline employees who violated Medicaid/Medicare requirements, he did not qualify as an appropriate law enforcement authority under the Act.  Thus, Dr. Gentilello’s report to Mr. Rege was insufficient to afford him protection against retaliation under the Act.   The supervisor’s purely internal authority was not law enforcement but law compliance — in other words, the supervisor was only capable of ensuring that the medical center followed federal directives.  This bare power to urge compliance or pure noncompliance did not transform him into an “appropriate law enforcement authority” as defined in the Act.

MORAL OF THE STORY? If you want the protection of the Texas Whistleblower Act, blow the whistle to those authorities that either issue or enforce laws or investigate or prosecute their violation (hint: they are likely to be outside the organization).  Reporting a violation to an internal supervisor, with a few very narrow exceptions, will not afford the protection against retaliation under the Texas Whistleblower Act.

For more information, contact Leiza Dolghih.

Last Minute Changes to the Expedited Trial Rules in Response to Comments

After receiving hundreds of public comments regarding the expedited trial rules, the Texas Supreme Court made some changes to the Texas Rule of Civil Procedure 169 (final version here).

Some of the comments criticized the draft rules’ mandatory nature and opposed the prohibition of alternative dispute resolution in expedited actions; other comments raised concerns with the limits on discovery and trial time.  (Previous coverage at The New Expedited Trial Rules: What to Expect).

The Texas Supreme Court kept the mandatory nature of the rules, but made the following changes to TRCP 169 before giving its final approval:

1.  Lawsuits filed in Justice Courts are now exempt from the expedited trial procedure.

2.  The courts can continue an expedited lawsuit twice, not to exceed 60 days.

3.  The trial time has increased from 5 to 8 hours per side, and the parties can extend that time up to a maximum of 12 hours per side for good cause.

4.  The judges can now refer cases to an alternative dispute resolution (ADR) procedure unless the parties have agreed not to engage in ADR.   The ADR cannot exceed a half-day in length, and its cost cannot exceed twice the amount of the applicable civil filing fees.  It must be done at least 60 days before trial.

5.  Finally, in comments to TRCP 169, the Texas Supreme Court offered more guidance on the factors that a judge should consider in determining whether a good cause exists for removal of a case from the expedited process, including:

a.   whether there are multiple claimants seeking damages against the same defendant totaling more than $100,000;

b.   whether a defendant’s counterclaim exceeds $100,000; and

c.   the number of parties and witnesses, the complexity of the legal and factual issues, and whether an interpreter is necessary.

Texas Supreme Court Justice Nathan Hecht explained that the Court will monitor statistics gathered by the Texas Office of Court Administration about the cases that go to trial under the expedited trial rules, and might amend the rules in the future depending on what the statistics show about their effectiveness.

For more information, contact Leiza Dolghih.

Important Employment Law Cases to Follow in 2013

Vance v. Ball State University (7th Cir. 2011) – Who is a “Supervisor” under Title VII? 

The U.S. Supreme Court will resolve a split between federal appellate courts regarding the definition of a “supervisor” for purposes of liability under Title VII. Specifically, the Court will decide whether “supervisor” under Title VII includes only those employees who have the power to “hire, fire, demote, promote, transfer, or discipline” or whether it includes any employee who has “the authority to direct and oversee the harassed employee’s daily work.”

The decision is of tremendous importance to employers, who are strictly liable for harassment inflicted by supervisors, but are liable for harassment by employees only when they were negligent  in either discovering or remedying such harassment.   If the Supreme Court expands the definition of “supervisor” to include anybody who has the authority to direct and oversee an employee’s daily work, the potential for strict liability for employers will expand significantly.

D.R. Horton Inc. v. NLRB (NLRB, 2012) – Are Class Action Waivers in Arbitration Agreements Unlawful? 

The Fifth Circuit is going to review the decision by the NLRB in D.R. Horton  that an arbitration agreement requiring employees to waive “as a condition of employment” their right to bring a joint, class or collective action violated Section 8(a)(1) of the National Labor Relations Act, which protects the rights of employees to engage in concerted, protected activity.  The controversial NLRB decision called into question the growing practice of including class action waivers in employee arbitration agreements and is likely to reach the U.S. Supreme Court.

This is a significant case for employers because it impacts an employers’ ability to contract with its employees up front, as a condition of employment, over the issue of whether its employees may bring class or collective actions, which are notoriously expensive to litigate, expensive to settle, and financially risky to try in court.

Genesis HealthCare v. Symczyk (3rd. Cir. 2011) – Does Offering to Pay the Lone Plaintiff’s FLSA Claim Moot the Lawsuit Before Other Class Members Can Be Added? 

In this important Fair Labor Standards Act (“FLSA”) case, the U.S. Supreme Court will resolve another split among the federal appellate courts when it determines whether an FLSA collective action becomes moot after the named plaintiff receives an offer of judgment that provides full relief.   The Third Circuit Court of Appeals held that such an offer does not moot a putative action.  By contrast, the Ninth and Eleventh Circuits have held that a full offer of judgment to the named plaintiff does moot a putative collective action.

The Court’s resolution of this circuit split is expected to impact an important tool that employers have relied upon in an effort to confront the recent deluge of collective wage-and-hour litigation – the payoff of the plaintiff’s claim before a class action is certified.  The decision could greatly limit the ability of plaintiffs to use discovery to determine the existence of other similarly situated individuals, and will determine whether defendants can avoid a collective action by satisfying the claims of individual plaintiffs before they can join other members of their class.

University of Texas Southwestern Medical Center v. Nassar (5th Cir. 2012) – What is the Causation Requirement in a Title VII Retaliation Claim? 

The U.S. Supreme Court has agreed to decide whether Title VII’s retaliation provision, and similarly worded statutes, require a plaintiff to prove a more arduous but-for causation – that an adverse action would not have been taken by an employer but for a retaliatory motive – or instead require proof only that the employer had a mixed motive, meaning that a retaliatory motive was one of several reasons for the adverse employment action.  The Court’s decision is expected to provide much-desired clarity on the standard of proof.

For more information, contact Leiza Dolghih.

The New Expedited Trial Rules: What To Expect

The new expedited trial rules (specifically, amendments to TRCP 47, 169, 190.2 and 190.5) will go into effect on MARCH 1, 2013.

Virtually every faction of the litigation community has opposed the mandatory nature of the rules.   The Plaintiffs’ bar does not like the rules because they discourage novel litigation by forcing a rigid and cookie-cutter approach.  The Defense bar does not like them because the rules lump any compulsory counterclaims over $100,000 under the expedited trial rules as long as the plaintiff’s claim is $100,000 or less.   The judiciary is not thrilled about the rules because they take away the discretion from the bench and force the judges to act as timekeepers.  Finally, the mediators are worried that without the judge-ordered mediation, most litigants will choose to forego it.  Regardless of the objections, the Texas Supreme Court has decided to implement the rules.  Thus, the practice of law for most us as we know it is about to change.  Here are some ideas on what to expect.

Texas Rule of Civil Procedure 47 – Claims for Relief 

Damages statement:  Under TRCP 47, plaintiffs and counter-plaintiffs must include within their pleading a statement that the claims sought either: (1) are less than 100K; (2) are less than 100K without a claim for non-monetary relief; (3) are between 100k-500K; (4) are between 500K and 1 million; or (5) exceed 1 million.  These statements are inclusive of all damages except post-judgment interest.

No discovery may be conducted until the pleading contains the above damages statement.

Although it is not clear whether TRCP 47 applies retroactively or not, expect that come March 1, 2013, defendants will be filing motions to stay discovery until the petitions are amended to include the damages statement.  If a new petition is filed after March 1, 2013, as a plaintiff’s attorney, make sure you include the language or you will not be able to conduct discovery.  On the defense side, make sure the petition includes the language, and if it does not, file a special exception and/or a motion for protective order to prevent discovery.

On the plaintiff’s side, unless you want to be governed by the expedited trial rules, there is really no reason to plead damages under $100K.  The rules do not provide defendants with any special tools to challenge the amount of plead damages, thus, pleading over $100K , will not bear any adverse consequences.  In contrast, pleading less than $100K in damages, will ensure that the plaintiff cannot recover more than $100K, even if the jury awards a larger sum.  Such result, could lead to some unhappy clients, and, arguably, malpractice claims.

Some of Dallas judges estimate that 50-60% of district court cases will be filed under this expedited trial rules.  The percentage might reach 80-85% in the county-court-at-law cases.  For example, most of the debt collection and auto-collision cases are expected to fall under the expedited trial rules.

Texas Rule of Civil Procedure 169 – Expedited Actions 

Under TRCP 169, the expedited trial process applies to:

(1)  suits in which all claimants, other than counter-claimants, affirmatively plead that they seek only monetary relief aggregating $100,000 or less, including damages of any kind, penalties, costs, expenses, pre-judgment interest, and attorney fees.

(2) The expedited actions process does not apply to suit in which party has filed claim governed by the Family Code, the Property Code, the Tax Code, or Chapter 74 of the Civil Practice Remedies Code.

DiscoveryThe discovery in the expedited actions is governed by TRCP 190.2 (see below).

Trial Setting:  The court mus set the case for a trial date that is within 90 days after the discovery period ends.  Nothing, however, prevents the judge from resetting the case at a later point in time after the original trial date is reached.  If, on March 1, a court has a backlog of pre-expedited trial procedure cases, expect the newly filed Rule 169 cases to be reset for trial several times after the original 90-day period ends before they actually go to trial.

Removal from the expedited trial procedure:  A plaintiff can remove the case from the expedited procedure by amending the pleading to show damages exceeding $100K.   S/he can amend the pleading without leave of court within 30 days of the close of discovery or 30 days before the date set for trial.  Otherwise, the plaintiff must seek leave of court and establish that good case outweighs the prejudice to the defendant.   The good case standard is pretty low and the judges are not likely to deny the motion to leave as long as some reason for a late amendment is presented to them.

If multiple plaintiffs seek the monetary relief allowed under TRCP 169(a)(1) against the same defendant, the defendant may move to remove the case from the expedited trial procedure.

If a suit is removed from the expedited actions process, then the court must continue the trial date and reopen discovery under Rule 190.2(c).

Trial time:  Each side (not party) is allowed five hours to complete all of the following: jury selection, opening statements, presentation of evidence, examination and cross-examination of witness, and closing arguments.  If you have a co-defendant or co-plaintiffs, you need to make sure you agree on how to split that time.  The judges have no discretion to allow for a longer trial under the rules.  They do, however, have discretion in determining how much time within the 5-hour window should be spent on voir dire or opening/closing arguments.

It is not clear under the rules as to who is supposed to keep the time.

The drastic time limitations will force the parties to pick and choose what evidence to present to the jury.   A party should strive to get in as much evidence as possible and hope that it will preserve some grounds for appeal.

Expert Testimony:  A party may only file Daubert/Robinson motions during the trial; not before.  Presumably, the time spent on expert challenges during trial is included in the five-hour trial time limit.

Alternative Dispute Resolution:  Unless the parties have agreed to engage in the ADR or are required to do so by contract, the court may not order them to engage in such process.  Nevertheless, some judges may issues standing orders requiring “settlement conferences” or “recommend” that the parties engage in mediation.

TRCP 190.2 – Discovery Control Plan (also applies to divorces involving $50K or less)

Under this rule, all discovery must be conducted within 180 days after the date the first request for discovery of any kind served on a party.

Deposition Time:  Each party gets no more than six hours to examine & cross-examine all witnesses in oral depositions.  Thus, for example, if a plaintiff sues three defendants, the plaintiff gets six hours in deposition time, while defendants get 18 hours.  The parties may agree to expand the time to ten hours in total.

RFPs, RFAs, Interrogatories and RFDs:  Each party gets 15 RFPs, 15 RFAs, and 15 interrogatories.  Additionally, each party is allowed to request a disclosure of all documents, electronic information,a and tangible items that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses.  Such an RFD is NOT considered a request for production (although it, technically, is).

Reopening of Discovery:  If a suit is removed from the Rule 169 proceedings, the discovery reopens under Rules 190.3 or 190.4, whichever is applicable.  Any person previously deposed may be redeposed, and, on a motion of any party, the court should continue the trial date.

TRCP 190.5 – Modification of Discovery Control Plan 

Discovery Plan Modification:  The court may modify a discovery plan at any time when the interests of justice require.  Once again, this standard is pretty low, so expect to see a lot of modification motions in the expedited trial cases.

TRCP 91a – Dismissal of Baseless Causes of Action

Under this rule, a party may move to dismiss a cause of action on the grounds that it has no basis in law or fact.  As of now, it appears, that this rule will only help to dismiss the truly frivolous lawsuits and is not likely to change the motion practice significantly.  Moreover, the requirement that a judge rule on the motion within 45 days also does not speak in favor of many of such motions being granted.

CONCLUSION:  If you do not have a good reason, do not file under TRCP 169.  If you end up in an expedited action, remember that the judge can modify the discovery plan and give you more discovery for “good cause.”  If you need to get out of the expedited trial procedure, amend the pleading to assert damages over $100K and move to remove the case.  Finally, if you end up in an expedited trial, understand that the five-hour limit will probably be enforced rather strictly, so plan accordingly.

For more information, contact Leiza Dolghih.

Why Adding an Arbitration Clause to a Non-Compete Agreement Is a Good Idea.

In Nitro-Lift Techs., L.L.C. v. Eddie Lee Howard, et al.the U.S. Supreme Court once again expressed its strong support of the Federal Arbitration Act (FAA), in finding that where an arbitration clause in a non-competition agreement is valid, all other disputes related to the non-compete agreement, including its enforceability, should be decided by an arbitrator rather than the court.

In Nitro-Lift, the dispute arose from an employment contract between Nitro-Lift Technologies, L.L.C., and two of its former employees, which contained a non-compete clause and the following arbitration clause:

“Any dispute, difference or unresolved question between Nitro-Lift and the Employee (collectively the “Disputing Parties”) shall be settled by arbitration by a single arbitrator mutually agreeable to the Disputing Parties in an arbitration proceeding conducted in Houston, Texas in accordance with the rules existing at the date hereof of the American Arbitration Association.”

When the two employees went to work for the Nitro-Lift’s competitor, the company served them with a demand for arbitration, claiming that they breached their non-compete agreement.  Instead of arbitrating the dispute, the employees filed a lawsuit in a state court alleging that the non-compete agreement violated the state law and was null and void.  The state court dismissed their case after determining that the arbitration clause in their employment agreement was valid, but the Oklahoma Supreme Court reversed the lower court and declared that the FAA arbitration clause gave way to Oklahoma’s public policy regarding non-compete agreements and, without addressing validity of the arbitration clause, declared the non-compete “void and unenforceable” under the Oklahoma state law.

The U.S. Supreme Court reversed the Oklahoma Supreme Court and held that under the FAA, it is for the arbitrator – and not the state court – to decide whether a covenant not to compete violates the applicable state law.

PRACTICAL IMPLICATIONS:

The Nitro-Lift decision is a significant ruling for employers, many of which have gravitated toward arbitration agreements to reduce their exposure to costly and time-consuming employment litigation.

The employers can now feel confident that placing an arbitration clause in an employment agreement will allow them to avoid often-messy litigation of the non-compete provisions.

For more information, contact Leiza Dolghih.