Employment Law

II. Client’s Case
D. Application of the Law to the Facts
Was Jennifer in breach of the confidentiality agreement that she signed committing never to disclose confidential/proprietary information she encounters in the course of her employ at Greene’s’s?
Case in Brief: In Hallmark Cards, Inc. v. Janet L. Murley (2013), the defendant (Murley) parted ways with the plaintiff (Hallmark Cards) and was paid a total of $735,000 as the severance package. As Hallmark’s marketing vice-president, Murley had come across and was indeed in possession of some confidential information regarding the operations of the company. The said information was inclusive of, but was not limited to, market research and business plans. Upon the payment of the severance highlighted above, Murley amongst other things agreed to dispose-off any confidential documents and ensure that the company’s confidential information was not disclosed to any third party. Years later, the defendant got hired by a company by the name RPG as a consultant. For the said consulting work, she was offered a total of $125,000. Following her employ, she passed-on key Hallmark documents (and information) to RPG. Hallmark initiated a lawsuit upon its learning of the said developments. According to Peacock (2013), “the jury returned a verdict in Hallmark's favor for $860,000 - equal to her severance pay plus her consulting fee with RPG.”
On the strength of the jury verdict above, Greene’s appears to be in a strong position to pursue a breach of contract claim against Jennifer. All of Greene’s executives, including Jennifer, signed a confidentiality agreement. In the said agreement, Jennifer made a commitment to ensure that all confidential information or data she had acquired in the course of her employ at Greene’s was never disclosed to a third party. The process that Greene’s used in the creation of Ever-Gold was confidential. There is sufficient evidence that Jennifer retained a letter with information detailing Ever-Gold’s creation secret process. In addition to retaining the said information, she went ahead and disclosed the same to a competitor. There is no doubt whatsoever that Jennifer’s actions were in violation of the confidentiality agreement she had signed while in the employ of Greene’s. Indeed, in Hallmark Cards, Inc. v. Janet L. Murley, the Eighth Circuit was categorical that “under her agreement with Hallmark, Janet Murley was required to maintain the confidentiality of certain company information and was prohibited from using or disclosing Hallmark’s documents and other records after leaving the company, but failed to meet her obligations” (Frey, 2015, p. 118).
Greene’s would. therefore, be seeking in damages an amount that is equivalent to the business loss and damage it would suffer as a consequence of Jennifer’s disclosure of the proprietary process it uses to make Ever-Gold. Towards this end we would base our entitlement to the fact that Jennifer’s engagement to Howell was primarily anchored on her disclosure of the confidential information relating to Ever-Gold’s production process. There is evidence indicating that the contract she signed with our competitor had a specific provision addressing the handover of the said proprietary information. Indeed, as Frey (2015) points out, in Hallmark Cards, Inc. v. Janet L. Murley, “Hallmark based its entitlement to the fact that Murley’s value to RPG rested, in large part, on her disclosure of materials and information that belonged to Hallmark… the jury returned a verdict in favor of Hallmark, awarding it $860,000 in damages…” (117). On the strength of the information provided above, there is a high probability that Greene’s will win this particular legal dispute.
Did Greene’s violate the WARN Act in its firing of Jennifer?
Case in Brief: In Chestnut v. Stone Forest Indus. Inc. (1993), the defendant initiated a mass layoff as a consequence of its assessment of the prevailing business conditions. In this case, changes in market dynamics dictated that for Stone Forest Industries Inc. to remain in business, it had to lay-off a total of 81 employees. The affected employees brought a class action suit pursuant to the WARN Act. They indicated that the company did not afford them the mandated 60-day notice. On its part, Stone Forest Industries Inc. pointed out that the said layoffs were necessitated by unforeseeable business conditions. It thus sought to escape liability under the said Act. In the final analysis, the court made a finding to the effect “that the defendant qualifies for the exception set forth in section 2102(b) (2) (A)” (Justia, 2020).
In as far as Jennifer’s countersuit alleging wrongful termination, Greene’s probability of winning the lawsuit by invoking exceptions to the WARN Act are rather low. This is more so the case given that Greene’s will only win this particular lawsuit if it is able to demonstrate that its actions fall within the three exceptions of the WARN Act – and also prove that this could be considered a mass layoff. In the words of Gross and Compa (2009), “for compliance purposes, a mass layoff refers to downsizing that will affect 500 or more total employees, or between 50 and 499 employees if they represent 33% or more of the company's workforce” (39). The first exception relates to a faltering enterprise. On this front, which largely relates to plant closings, an enterprise ought to be experiencing difficulties with regard to remaining a going concern and has as a consequence sought additional capital. The WARN Act would not apply in those instances whereby giving a 60-day notice is likely to get in the way of gaining access to the said capital. Secondly, there is also what Gross and Compa (2009) refers to as “unforeseeable business circumstances” (37). In as far as this particular exception is concerned, a 60-day notice may not be necessary if the business circumstances triggering the layoffs were not anticipated. Third, the WARN Act may also not apply in the case of natural disasters that affect the business’ ability to continue in operation. The said disasters could be inclusive of, but they are not limited to, storms occasioning severe damage to company infrastructure, earthquakes, and floods. In Chestnut v. Stone Forest Indus. Inc., the defendant was able to successfully invoke the ‘unforeseeable business circumstances’ exception. Greene’s does not share the same circumstances as there is nothing to demonstrate that the company initiated layoffs as a consequence of circumstances that were largely unanticipated. Further, there is nothing to indicate that the enterprise’s operation had been impacted upon by a natural disaster or that the company was faltering. Most importantly, however, this cannot be describes as a mass layoff – especially given that it appears to target junior executive secretaries only.
Since for all intents and purposes the decision by Greene’s appears to have been a downsizing decision, a strong argument could be made by Jennifer that the company was discriminative in its decision to lay her off. This is more so the case if the Pregnancy Discrimination Act were to be invoked – particularly given that Jennifer was notified of the decision to lay her off following her advise to the HR head that she intended to take additional time off due to her pregnancy. In its defense, Greene’s could demonstrate that Jennifer was an ‘at-will-employee’ and that there was indeed a plan in place to eliminate the positions affected and that the decision to layoff Jennifer was not an isolated incident – hence not discriminatory in nature. However to be able to do this, the company would have to produce evidence of the said plan in the form of organizational minutes or other documentation.
E: Impact Assessment
i. The situation described herein would most likely have an impact on public perception about Greene’s. This is more so the case given that the layoff in this case was not conducted in a professional and appropriate manner. The fact that the communication to Jennifer was made at the very moment she announced her pregnancy appears discriminative. For instance, given that most customers of Greene’s would ideally be women, this could alienate a significant portion of its clientele – the possible legal outcomes notwithstanding.
ii. There are several courses of action that Greene’s could take going forward in an attempt to alleviate any damages to its public image. One such move would be the formulation of a company termination policy that provides for not only a termination notice, but also a severance. This the company would be doing as a demonstration of compassion and to minimize the probability of lawsuits in the future. However, at present, the company ought to defend itself against a clear breach of a confidentiality agreement.
iii. To avoid similar situations in the future, the company could amongst other things plan layoffs more effectively, notify employees in advance of impending layoffs and the reasons for the said layoffs, implement the layoffs in a more professional manner (Jennifer’s dismissal was largely unprofessional), provide a severance pay (to provide soft landing for laid off employees), etc.
References
Frey, M.A. (2015). Essentials of Contract Law (2nd ed.). Mason, OH: Cengage Learning.
Gross, J.A. & Compa, L.A. (2009). Human Rights in Labor and Employment Relations International and Domestic Perspectives. Champaign, IL: Labor and Employment Relations Association.
Peacock, W. (2013). Breach of Contract, Confidential Info Leak Case: Hallmark Prevails. Retrieved from https://blogs.findlaw.com/eighth_circuit/2013/01/hallmark-prevails-in-breach-of-contract-confidential-info-leak-case.html