Broadneck Booster Club Sells Naming Rights to Lockers

Hyatt & Weber paralegal Michele Shipley, President of the Broadneck High School Boosters Club, has been working closely with Broadneck Athletic Director Ken Kazmarek to raise funds for the renovation of the field house. Michele and the volunteers have been selling naming rights to the 138 lockers to alumni and friends of the school. As part of the renovated field house, the school is using an innovative approach to not only help finance the $750,000 cost of the project, but to also give alumni a permanent stamp on the Bruins’ athletic teams’ new facility.

A decade in the works, the new facility is slated to open in the fall. Read more about the creative fundraising efforts in the Capital Gazette .

Hyatt & Weber Sponsors Annual Paca Girlfriends to Benefit Historic Annapolis

The annual Paca Girlfriends Flower Power Party is a night of food, fine wine, friendship, flowers, and fun! It is THE event of the summer in Annapolis. Guests experience the charm of the William Paca House, indulge in culinary creations donated by the area’s premier chefs, and stroll through the luxurious English-style garden filled with beautiful rose bushes, an endearing fish-shaped pond, and other garden features, all while sipping a signature Pacatini.

On June 21, 2017 Hyatt & Weber was pleased to join other local businesses in sponsoring the party, which raises money for repair and maintenance on the Historic Annapolis house museums, helps the organization connect with the community through educational programs, and supports an endowment that ensures that Historic Annapolis will always be around to protect the treasures of Annapolis.

Joining Hyatt & Weber attorney Amitis Darabnia and firm marketing director Alice Simons at the party were Pam Finlay, Ann Alsina, McShane Glover and Diane Devaney.

Appellate Court Upholds Vulgar Facebook Post as Protected Concerted Activity

In National Labor Relations Board v. Pier Sixty, LLC , 855 F.3d 115 (2d Cir. 2017), the United States Court of Appeals for the Second Circuit upheld a decision by the National Labor Relations Board (“NLRB” or “Board”) that found a vulgar Facebook post repeatedly using variations of the “f” word constituted protected concerted activity.

In Pier Sixty , the employer (Pier Sixty) operated a catering company in New York City. Many of Pier Sixty’s service employees started seeking union representation in 2011. A contested union campaign ensued, which included threats from management that employees may be subject to discipline or terminated from employment for union-related activities. Two days before the election, a supervisor named Robert McSweeney told an employee named Hernan Perez and two other servers at an event in a harsh tone that they each had to “[t]urn your head that way [toward the guests] and stop chitchatting.” McSweeney also told them to “[s]pread out, move, move” in the same allegedly harsh tone. Perez was upset by McSweeney’s tone, and considered it the latest example of poor treatment and disrespect directed toward employees of the company. About forty-five minutes after the incident while on a break, Perez took to Facebook and posted the following:

Bob is such a NASTY MOTHER FUCKER don’t know how to talk to people! ! ! ! ! ! Fuck his mother and his entire fucking family! ! ! ! What a LOSER! ! ! ! Vote YES for the UNION! ! ! ! ! ! !

There were at least ten co-workers among Perez’s Facebook friends who could see the post, and it was publicly accessible, which Perez did not know at the time of posting. Three days after posting (and one day after the election), Perez took the post directed at McSweeney down, but its contents had already come to management’s attention. Approximately twelve days after the post had come down and the company had completed an investigation, Pier Sixty terminated Perez’s employment.

Perez filed an unfair labor practice charge with the NLRB. An administrative law judge (“ALJ”) found that Pier Sixty violated Sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act (“NLRA”) by terminating Perez’s employment in retaliation for engaging in protected concerted activity. Pier Sixty filed exceptions to the ALJ’s decision and the Board upheld the decision. Pier Sixty then appealed to the Second Circuit.

The Second Circuit noted that Section 7 of the NLRA permits employees to “engage in . . . concerted activities for the purpose of collective bargaining or other mutual aid and protection.” Sections 8(a)(1) and 8(a)(3) of the NLRA prohibit an employer from terminating an employee’s employment for engaging in protected concerted activity under Section 7. Employees that engage in “abusive” conduct, however, lose the protections of the NLRA, even if the conduct is ostensibly concerted activity. The question in this case was whether Perez’s Facebook post constituted abusive behavior that was not protected under the NLRA.

The Second Circuit noted that determinations as to what constitutes “abusive” behavior typically have been evaluated under the following four factor test: (1) the place of the discussion; (2) the subject matter of the discussion; (3) the nature of the employee’s outburst; and (4) whether the outburst was provoked in any way by an unfair labor practice charge. The court further noted that the four factor test had been questioned in recent years over concerns that it did not give sufficient consideration to outbursts in public places in the presence of customers. The Second Circuit also noted that the NLRB’s General Counsel’s Office in the last few years developed “employee-friendly” guidance that limited an employer’s ability to issue rules regarding the use of social media, even when employees post public criticism about a company and its workplace. As a result of the General Counsel’s guidance, the Board has since developed a nine-factor “totality of circumstances” test to evaluate conduct in social media posts. The nine-factors are: (1) evidence of antiunion hostility; (2) whether the conduct was provoked; (3) whether the conduct was impulsive or deliberate; (4) the location of the conduct; (5) the subject matter of the conduct; (6) the nature of the content; (7) whether the employer considered similar content to be offensive; (8) whether the employer maintained a specific rule prohibiting the conduct at issue; and (9) whether the discipline imposed was typical for similar violations or proportionate to the offense. Although the Second Circuit commented that it was “not convinced that the amorphous ‘totality of the circumstances’ test adequately balances an employer’s interests,” it was not going to question its validity in this case because Pier Sixty did not object to its use.

In finding that substantial evidence supported the Board’s decision, the Second Circuit considered several factors. First, the court found that the “subject matter” of the post included workplace concerns – specifically, management’s allegedly disrespectful treatment of employees and the upcoming union election. The court further noted that Pier Sixty had demonstrated its hostility toward union activity by making various threats to employees, including threats to terminate employment and rescind benefits, and by enforcing a “no talk” rule toward certain groups of employees, including Perez who was prevented from discussing the union. Based on this evidence, the court concluded that Perez’s outburst was not an idiosyncratic reaction to a request by management; rather, it was part of an intense debate regarding managerial mistreatment of employees before a representation election. Second, there was evidence that Pier Sixty had not disciplined employees for profanity in the workplace, including use of the words “fuck” and “mother fucker.” To this end, the court noted there was evidence of daily obscenities in Pier Sixty’s workplace of the kind used in Perez’s post, including regular use of such terms by McSweeney, and no employee had been terminated from employment for such vulgarity until Perez was terminated around the time of a union election. The court further found that, although there were vulgar comments in Perez’s post specifically referencing McSweeney’s family, it was reasonable to conclude that those vulgarities were directed at McSweeney himself and not his family. Third, with respect to the location of Perez’s comments, the court found they were made in an online forum that is a key medium for workers to communicate and organize in the modern era. Although the post was available for customers to see because it was publicly posted, Perez took down the post upon learning that his Facebook page was not set on private (which occurred only three days after he posted it in the first place) and the post was not in the “immediate presence” of customers and it did not “disrupt the catering event.”

Based on the foregoing, the court upheld the Board’s decision that Pier Sixty had committed unfair labor practices by terminating Perez’s employment. The Second Circuit, however, noted that its decision “sit[s] at the outer-bounds of protected, union-related comments, and any test for evaluating ‘opprobrious conduct’ must be sufficiently sensitive to employers’ legitimate disciplinary interests.”

The Second Circuit’s decision in Pier Sixty is significant because it is yet another example of the wide latitude employee’s are given to make comments on social media that are vulgar, disparaging, and even threatening toward management without being subject to discipline. While the Second Circuit considers this case to be on the “outer-bounds” of protected concerted activity and welcomes a new test to evaluate the degree of protection afforded to social media posts by employees, until a new test is established and it curtails some of the conduct employees have been allowed to perpetuate via social media, companies need to be mindful of risks associated with taking disciplinary action against employees who post vulgar and obscene material on social media about supervisors and the company.

If you have any questions regarding this post, please contact Stephen B. Stern at sstern@hwlaw.com or (410) 260-6585.

DISCLAIMER: This Blog/Website is for educational purposes and to provide readers with general information about developments in the law. This Blog/Website is not intended and should not be relied on for legal advice. This Blog/Website does not constitute an advertisement for legal services and it does not endorse, promote, or recommend the products, services, or websites of any third party. Reading, reviewing, or any other use of this Blog/Website does not create an attorney-client relationship between the reader and the firm or any attorney at the firm.

When is a Settlement Agreement Enforceable?

When parties negotiate terms of an agreement, particularly a settlement agreement, they often confirm certain terms in writing with the understanding that “standard” terms, such as releases in the case of a settlement, will be added to the final agreement. Those “standard” terms, however, are not always part of the agreement and, thus, an enforceable agreement actually may be reached sooner than the parties realize. This is what happened, at least to one party, in Scheinmann v. Dykstra , No. 1:16-cv-05446-AJP, 2017 WL 1422972 (S.D.N.Y. Apr. 21, 2017).

In Scheinmann , Scheinmann’s counsel sent an email to Dykstra’s counsel on March 13, 2017, offering in pertinent part that the parties “settl[e] this matter on the following terms:

● Mr. Dykstra agrees to an up-front payment of some amount. I realize that he has significant financial difficulties and I am not talking about a large number. You tell me what he can come up with.

● Mr. Dykstra consents to a judgment being taken in favor of Mr. Scheinmann in the amount of $15,000 less the amount of the up-front payment; and

● Mr. Dykstra dismisses his counterclaim with prejudice.

This offer remains open until 5 pm (central time) on Wednesday, March 15th.”

Dykstra’s counsel responded the next day with an email stating:

My client can agree to the second and third terms, but he does not have any money to pay towards the $15,000. He was counting on the Harper Collins money (as was I) and his other lawsuit was dismissed on summary judgment.

Please let me know if we have a deal.

The following day Scheinmann’s counsel responded with another email stating in pertinent part: “We have a deal. I will put together a consent judgment within the next week.”

About two and a half hours later after Scheinmann’s counsel confirmed the parties “have a deal,” Dykstra’s counsel responded with an email of his own inquiring, “are you going to draft the settlement/mutual release?” Scheinmann’s counsel replied by noting there was no need for “another settlement agreement” because “the entirety of the [settlement] agreement” was contained in their prior emails. Scheinmann’s counsel elaborated further by noting, “[t]he judgment . . . concludes the litigation” and “no additional release [is] necessary.” Dykstra’s counsel countered by contending that a mutual release was “a standard term[,]” and he needed something in the judgment to confirm that all disputes between the parties are resolved so that there is finality.” Dykstra ultimately chose not to sign the proposed consent judgment and Scheinmann filed a motion to enforce the settlement.

The court found that the parties’ emails demonstrated the parties “reached a mutual agreement to settle the case following an offer, acceptance, consideration, mutual consent and intent to be bound.” The court relied heavily on the email confirming that the parties “have a deal.” The court further noted that an exchange of emails may constitute an enforceable agreement if the emails contain all the agreement’s essential terms. In this case, the court concluded the emails contained all the material terms, which were the only terms. It was only after the parties had reached agreement that the notion of a mutual release had first been raised. But, as Scheinmann’s counsel noted, there was no need for mutual releases because the judgment that was to be entered would conclude the litigation. Additionally, the judgment, once entered, would effectuate the agreed upon terms – settlement, dismissal of the action with prejudice, judgment entered against Dykstra, and dismissal of Dykstra’s counterclaim. Although the court acknowledged that a mutual release might be a “standard item” in many settlements, it concluded that such a provision is not material to all settlement agreements. Furthermore, the court noted that there are various types of releases, ranging from broad releases releasing all claims from the beginning of time to more limited, specific releases.

The court further found that the settlement was enforceable under the four Winston factors: (1) whether there has been an express reservation of the right not to be bound in the absence of a writing; (2) whether there has been partial performance of the contract; (3) whether there is agreement on all the terms of the alleged contract; and (4) whether the agreement is the type of contract that is usually put in writing. The court noted that the first factor was the most important and found that there was no expression by either party in this case not to be bound without a signed written document. The absence of such a reservation weighed in favor of Scheinmann, meaning there was an enforceable agreement. As for the second factor, the court found that there was not partial performance, as Dykstra repudiated the agreement before the judgment was signed. The court noted that this factor was neutral and did not favor either party’s position. With respect to the third factor, the court found that the parties agreed to settle their dispute with a judgment entered against Dykstra for a specific judgment amount and dismissal of his counterclaim. The court further found that a general release was not a material term of the agreement. Based on these findings, the court determined that the third factor weighed in favor of Scheinmann’s position that there was an enforceable settlement agreement. Lastly, the court determined that the fourth factor weighed in favor of Scheinmann as well. To this end, the court found that the agreement at issue was not a complex one and “[n]o formal writing was required to memorialize these terms.” The court further noted that Dykstra did not even contend a more formal writing was required, but only sought the addition of a release, and that a writing did exist in the form of the email exchange that memorialized the terms of the parties’ agreement.

The court’s decision in Scheinmann is an important reminder that parties may not be able to back away from a settlement agreement if they expect “standard” terms to be added to the agreement and those “standard” terms ultimately are not included. In short, before confirming an agreement has been reached, whether it is a settlement agreement or another agreement, make sure all material terms you want addressed are adequately referenced in the term sheet or email exchange, or at least note an appropriate reservation that the agreement is subject to approval of a written agreement that will elaborate on the agreed upon terms and include other terms.

If you have any questions regarding this post, please contact Stephen B. Stern at sstern@hwlaw.com or (410) 260-6585.

DISCLAIMER: This Blog/Website is for educational purposes and to provide readers with general information about developments in the law. This Blog/Website is not intended and should not be relied on for legal advice. This Blog/Website does not constitute an advertisement for legal services and it does not endorse, promote, or recommend the products, services, or websites of any third party. Reading, reviewing, or any other use of this Blog/Website does not create an attorney-client relationship between the reader and the firm or any attorney at the firm.

Supreme Court Rules on Definition of Debt Collector

In Henson v. Santander Consumer USA, Inc. , 137 S. Ct. 1718 (2017), the United States Supreme Court gave some clarity as to who is a “debt collector” under the Fair Debt Collection Practices Act (“FDCPA”). In this regard, the Court ruled that an entity that purchases debt and then seeks to collect that debt is not a “debt collector” within the meaning of the FDCPA.

The FDCPA seeks to deter certain types of debt collection practices. To help achieve this outcome, the statute authorizes private lawsuits and substantial fines against violators. A key aspect to such lawsuits is defining who constitutes a “debt collector.” Section 1692a(6) of the FDCPA defines a “debt collector” as anyone who “regularly collects or attempts to collect . . . debts owed or due . . . another.”

It is understood that third party debt collection agents generally qualify as “debt collectors” under the statute. But that is not the type of entity that was involved in the dispute before the Supreme Court. In Henson , CitiFinancial Auto loaned money to individuals who sought to purchase automobiles, the plaintiffs in the lawsuit (who were the petitioners before the Court) defaulted on those loans, and that debt was purchased by Santander, which in turn sought to collect those defaulted loans from the plaintiffs. The plaintiffs accused Santander of engaging in debt collection practices that violated the FDCPA. Santander argued that it was not subject to the FDCPA because it was not a “debt collector” within the meaning of the statute. To this end, Santander argued that, with respect to the loans at issue, it was not seeking to collect a “debt[ ] owed or due . . . another.”

The Court found the text of the statute clear and unambiguous and agreed with Santander. In this regard, because Santander purchased the debut and sought to collect the debt for itself, Santander was not seeking to collect the “debt[ ] owed . . . another.” As a result, the Court held that Santander was not a “debt collector” under the FDCPA and, thus, it was not subject to the FDCPA’s restrictions.

In reaching this conclusion, the Court rejected each of the petitioners’ textual and grammatical arguments, the details of which need not be addressed in this post. The petitioners also argued that because the statute expressly excluded from the definition of “debt collector” certain persons who acquired debt before default, it must be inferred that the definition of “debt collector” necessarily included those who acquire debt after default, as those persons were not expressly excluded from the definition. The Court rejected this argument as well, finding that it “doesn’t necessarily follow that the definition must include anyone who regularly collects debts acquired after default.” The Court also rejected each of the petitioners’ policy arguments, which need not be addressed here.

In reaching its decision, the Court specifically noted two issues that it was not addressing. First, the Court noted that it was not deciding whether Santander qualified as a “debt collector” because it regularly acted as a third party collection agent for debts owed to others. The Court explained that the petitioners did not raise this issue in their petition for certiorari and, thus, it was not going to address the issue in its decision. Second, the Court noted that it was not interpreting another definition of “debt collector” that included “any business the principal purpose of which is the collection of any debts.” The Court explained that this definition was not litigated much by the parties and it did not agree to address the issue in granting certiorari.

The Supreme Court’s decision in Henson is significant in that it should give banks and other purchasers of loans in default the ability to seek collection of those loans without being subjected to lawsuits filed by the debtors under the FDCPA. With that said, this freedom FDCPA litigation may not be long-lived. The Court made clear that it was not deciding whether a party that seeks to collect debts it purchased and that also regularly seeks to collect debts owed to another is a “debt collector” under the FDCPA. Likewise, the Court stated it was not addressing an alternative definition of “debt collector” that involved any business whose principal purpose involved the collection of any debts. Future litigation could end up with a different outcome for banks and other purchasers of loans in default who intend to collect those debts.

If you have any questions regarding this post, please contact Stephen B. Stern at sstern@hwlaw.com or (410) 260-6585.

DISCLAIMER: This Blog/Website is for educational purposes and to provide readers with general information about developments in the law. This Blog/Website is not intended and should not be relied on for legal advice. This Blog/Website does not constitute an advertisement for legal services and it does not endorse, promote, or recommend the products, services, or websites of any third party. Reading, reviewing, or any other use of this Blog/Website does not create an attorney-client relationship between the reader and the firm or any attorney at the firm.

Court Applies Inevitable Disclosure Doctrine to Defend Trade Secrets Act Case

In Molon Motor & Coil Corp. v. Nidec Motor Corp. , No. 16 C 03545, 2017 WL 1954531 (N.D. Ill. May 11, 2017), a federal court in Illinois was asked to decide whether the complaint before it alleged sufficient facts to support a claim under the federal Defend Trade Secrets Act (“DTSA”) and the Illinois Trade Secrets Act (“ITSA”). In finding that the plaintiff corporation alleged facts sufficient to survive a motion to dismiss, the court relied on the inevitable disclosure doctrine to conclude that the complaint should survive.

In Molon Motor , Manish Desai (“Desai”) was the Head of Quality Control for Molon Motor & Coil Corporation (“Molon”), a company that made fractional and sub-fractional electric motors and gear motors that served various industries. Desai’s job duties included overseeing product liability testing, coordinating the production of engineering data, and processing quality assurance test results, among other things. While employed by Molon, Desai signed an employment agreement that precluded the unauthorized use of company data. Molon viewed this commitment as important, as Desai allegedly had access to all of Molon’s trade secrets and other confidential business information.

Desai eventually resigned from Molon to perform similar job duties for Merkle-Korff, a competitor of Molon. Merkle-Korff later became Nidec Motor Corporation (“Nidec”), also a competitor of Molon. Before leaving his employment with Molon, Desai allegedly copied onto a Kingston portable data drive many of Molon’s trade secrets and other confidential business information, including engineering, design, and quality control files, as well as communications with customers.

Molon sued Nidec under the DTSA and ITSA, alleging that Desai unlawfully disclosed to Nidec Molon’s trade secrets and that Nidec used and continued to use those trade secrets. Nidec filed a motion to dismiss, arguing that Molon did not sufficiently allege a “misappropriation” under either statute and, even if a misappropriation was alleged, there was no basis to infer that Nidec accessed or used any of the information allegedly misappropriated.

The court analyzed the two statutes together, noting that both the DTSA and ITSA used very similar definitions. Nidec argued that no “misappropriation” could have occurred under the facts alleged by Molon because Desai allegedly copied the data while he was still employed by Molon, meaning he was authorized to access the files and did so using his Molon username and password. In other words, Desai could not have taken any trade secrets by “improper means.” Molon countered, and the court agreed, that Desai was on notice through his employment agreement that he could not use Molon’s confidential business information for any purpose other than to perform his job duties for Molon and, because Molon did not use or provide flash drives to employees to access its computer network, it was reasonable to infer that any copying by Desai of Molon’s confidential information was not for Molon’s benefit. Upon reaching this conclusion, the court found that it also was reasonable to infer that Desai copied the information for the benefit of his future employer, which would mean that Desai acquired the trade secrets through “improper means.”

The court then analyzed whether Molon adequately alleged that Nidec (as opposed to Desai) acquired Molon’s trade secrets. Nidec argued that Molon did not include any specific allegations in its complaint to support such a finding. Molon countered that it did not need to be specific at this stage of the proceeding, as the acquisition could be inferred pursuant to the inevitable disclosure doctrine. Under the inevitable disclosure doctrine, which is not recognized in every state, a plaintiff may prove misappropriation of a trade secret where a defendant’s “new employment will inevitably lead him [or her] to rely on the plaintiff’s trade secrets.” To allow such an inference, courts consider (1) the level of competition between the new and former employer, (2) whether the employee’s position with the new company is comparable to the position the employee performed for his/her former employer, and (3) the actions the new company has taken to prevent the former employee from using or disclosing the former employer’s trade secrets.

With respect to the first factor, the court found that Molon sufficiently alleged that it and Nidec were direct competitors in the same markets. With respect to the second factor, Nidec argued that Desai’s work in quality control, as opposed to design for example, did not involve trade secrets and other confidential business information. The court, however, found that Desai’s work in quality control did not preclude him from having access to trade secrets and other confidential information, as “employees of all stripes have been found to fit the bill” when it comes to trade secret cases. Furthermore, the court noted that Desai was the Head of Quality Control, which was not a “low-rung position,” but, instead, was a “broad role with a far-reaching set of tasks” that plausibly could include access to and use of trade secrets. Thus, the court found that Molon adequately alleged that Desai performed similar job duties for Nidec as he did for Molon and those duties could have involved access to and use of trade secrets. As for the third factor, the court found the record was silent, which was not surprising at the motion to dismiss stage because a complaint is not likely to allege what, if anything, a competitor did to safeguard against using a competitor’s trade secrets. Thus, the court did not hold the absence of allegations in this regard against Molon.

Lastly, the court addressed Nidec’s argument that, with respect to the DTSA claim, Molon did not allege any wrongful acts occurred after the effective date of the DTSA (May 11, 2016). The court couched the question as whether the inevitable disclosure doctrine allows an inference of continued use, which in this case would extend beyond the effective date of the DTSA. While the court cautioned that complaints should not stack inferences on top of inferences, the court found that the inferences were reasonable in this case. In this regard, the court found that the trade secrets at issue were not the kind to go stale in a relatively short period of time. The trade secrets at issue involved motor designs and related quality control data – the kind of information that likely will remain relevant for years to come. Thus, it was reasonable to infer a continuing use and that the trade secrets were used after the effective date of the DTSA. As a result, the court held that the complaint stated a claim upon which relief could be granted and, thus, the motion to dismiss was denied.

The court’s decision in Molon Motor is significant for multiple reasons. First, it is an important reminder about the utility of the inevitable disclosure doctrine for companies seeking to protect against the misappropriation of trade secrets. Second, with a federal court applying the inevitable disclosure doctrine under the DTSA, it opens up questions as to whether and how courts from jurisdictions that have rejected the inevitable disclosure doctrine (such as Maryland) will apply the doctrine, at least at the federal level in connection with the DTSA. Third, the court’s decision in Molon Motor illustrated how the nature of a trade secret could affect the degree of protection it receives. In this regard, the court in Molon Motor recognized that design plans are likely to have a longer utility than perhaps some other type of trade secret and, thus, the court inferred that the defendant in this case, Nidec, likely was using the trade secret for an extended period of time.

If you have any questions regarding this post, please contact Stephen B. Stern at sstern@hwlaw.com or (410) 260-6585.

DISCLAIMER: This Blog/Website is for educational purposes and to provide readers with general information about developments in the law. This Blog/Website is not intended and should not be relied on for legal advice. This Blog/Website does not constitute an advertisement for legal services and it does not endorse, promote, or recommend the products, services, or websites of any third party. Reading, reviewing, or any other use of this Blog/Website does not create an attorney-client relationship between the reader and the firm or any attorney at the firm.

Dot Your I’s, Cross Your T’s, and Place Your Commas

When drafting contracts, briefs, and other documents, the significance of placing a comma is often overlooked. The decision to include or omit a comma, however, could be dispositive in a dispute over the meaning of legislation or a contract. Indeed, in O’Connor v. Oakhurst Dairy , 851 F.3d 69 (1st Cir. 2017), the United States Court of Appeals for the First Circuit found the absence of a comma created an ambiguity when interpreting certain legislation, and that ambiguity drove the outcome of the litigation.

In Oakhurst Dairy , the First Circuit was asked to interpret a Maine statute that governed the eligibility of employees to be paid overtime after working more than forty hours in a workweek. The provision at the heart of the dispute involved an exemption from the requirement to pay employees one and one-half times their regular hourly rate of pay for overtime hours worked. The exemption specifically provided that the overtime statute did not apply to:

The canning, processing, preservation, freezing, drying, marketing, storing, packing for shipment or distribution of:

  1. Agricultural products;
  2. Meat and fish products; and
  3. Perishable foods.

The dispute concerned the meaning of the phrase “packing for shipment or distribution.” The plaintiffs (who were delivery drivers) argued that the phrase “packing for shipment or distribution” constituted a single activity, which would result in the exemption not applying to them (meaning they would be eligible for overtime compensation). The company on the other hand argued that the phrase “packing for shipment or distribution” constituted two distinct activities – one activity being “packing for shipment” and the other being “distribution” of dairy products, which are perishable. If the court accepted the company’s interpretation, the exemption would apply and the employees would not be eligible for overtime compensation.

The parties acknowledged that the dispute over the phrase at issue largely stemmed from the absence of a comma after “shipment” and before “or.” To interpret the phrase’s meaning, the court applied many interpretive tools and ultimately ruled the phrase is ambiguous, which, under Maine law, required the court to give the ambiguous phrase a narrow construction to favor the broad, remedial protections provided by the statute.

The court first examined the rule against surplusage advocated by the company. Under this rule, the court must give independent meaning to each word in a statute and not treat any word as unnecessary. To this end, the company argued that, although “shipment” and “distribution” are synonymous, they are not redundant because “shipment” describes the exempt activity of packing while “distribution” is listed as an exempt activity in its own right. The drivers also contended that there was no redundancy, arguing that “shipment” and “distribution” each describe “packing” and, thus, there is no redundancy. In this regard, the drivers argued that “shipment” refers to outsourcing of the delivery of goods to a third party while “distribution” refers to a seller’s in-house transporting of goods directly to recipients. The court ultimately concluded that the legislature’s use of two different words (rather than using the same word twice) suggested the terms “shipment” and “distribution” were not meant to be used interchangeably and packing was meant to be exempt if it was done for “shipment” or “distribution.”

The court also considered the writing convention of using a conjunction to mark off the last item in a list. To this end, the company argued that there was a comma before “packing” and, thus, before “distribution.” While Oakhurst acknowledged that the exemption’s meaning would be easier to discern if a comma was included before “or distribution,” the company noted that the Maine Legislative Drafting Manual specifically instructs not to use a comma “between the penultimate and the last item of a series.” The drivers countered, however, that the Drafting Manual also cautioned that a missing comma could create ambiguity when an item in a series is modified (which was the case here). Thus, the court concluded that the Drafting Manual did not provide the clear guidance Oakhurst sought. Nevertheless, the court found the convention of using a conjunction to be the company’s most persuasive point.

The court considered another writing convention – one concerning a parallel use. The drivers noted that each of the items in the list clearly constituted an exempt activity (e.g., canning, processing, preserving), but packing was not. Rather, the term “packing” was a gerund while “distribution” and “shipment” were not. According to the drivers, when applying the convention of parallel use, the terms “distribution” and “shipment” must play the same grammatical role – and one that was distinct from the role of the gerund. In furtherance of this convention, the terms “distribution” and “shipment” must be objects of the preposition “for” that describes the exempt activity of “packing” while the gerunds each reflect stand-alone exempt activities. The court noted that the company’s interpretation of the phrase violated these writing conventions.

Ultimately, the First Circuit concluded that the parties’ various textual arguments were unsatisfactory and it had to look to the statute’s legislative history and purpose for further guidance in reaching its decision. The details of the particular statute’s legislative history and purpose are not relevant for purposes of this blog post, however. Rather, the takeaway from this post should be appreciating the importance of commas and how including or omitting a comma could be dispositive in the outcome of litigation. Although this case involves the interpretation of a statute, the lessons learned here are not so limited. Guiding principles regarding the use of commas and other writing conventions should be strongly considered when drafting contracts, for example, as including or excluding a comma in a particular contract provision may ultimately determine whether a company owes or is owed millions of dollars in a subsequent dispute.

If you have any questions regarding this post, please contact Stephen B. Stern at sstern@hwlaw.com or (410) 260-6585.

DISCLAIMER: This Blog/Website is for educational purposes and to provide readers with general information about developments in the law. This Blog/Website is not intended and should not be relied on for legal advice. This Blog/Website does not constitute an advertisement for legal services and it does not endorse, promote, or recommend the products, services, or websites of any third party. Reading, reviewing, or any other use of this Blog/Website does not create an attorney-client relationship between the reader and the firm or any attorney at the firm.

BWI Business Partnership Celebrates Annual Meeting with Southwest

On May 31, 2017, hundreds of local businesses celebrated the BWI Business Partnership’s annual meeting in the Observation Deck at BWI Airport. Tom Nealon, President of Southwest Airlines, flew in from Dallas to present the keynote. The new Maryland flag Southwest plane pulled up to the gate just in time for the event.

The mission of the BWI Business Partnership is to facilitate quality relationships among leaders from business, government and organizations who want to make a difference by accelerating positive growth for the BWI Region. Hyatt & Weber is a proud member of the BWI Business Partnership.

Read more about the BWI Business Partnership.

Hyatt & Weber Mourns the Passing of Beth Towers

The attorneys and staff of Hyatt & Weber are sad to announce the passing of one of our own, longtime paralegal, Beth Towers. Beth passed away surrounded by her husband, Francis, children and family on May 26, 2017, after a short illness.

Beth grew up in Severna Park and was a resident of Millersville. She received her BA from UMBC. She was devoted to her two sons, Joseph and Matthew, and enjoyed being part of their active lives. One of Beth’s favorite hobbies was local history, especially researching the Ridouts of Whitehall, her family by marriage. She also enjoyed live theater, including attending the opera with her mother.