Confidential information notes posted
April 3, 2008
I just posted a long article with general notes about confidentiality clauses.
Moved ….
April 2, 2008
I’ve migrated the 100 Feet Up blog to self-hosted WordPress software. The RSS feed is the same, and so is the URL (www.100feetup.com), so the change should be transparent to just about everyone.
I’ve been a faithful TypePad user for going on five years, but WordPress can do some writerly stuff I want to do that TypePad can’t (notably, editing existing posts). I’m also very pleased with the WordPress user interface.
An oral understanding might not get you off the hook for a written contractual obligation
April 1, 2008
You have to wonder whether to feel sorry for the loan broker in Wheeler vs. Blumling. This broker found a business loan for a customer, and then went along with the lender’s insistence that the broker himself sign a guaranty. Unfortunately, things went badly awry (including the indictment of one of the borrower’s business associates for wire fraud), and the lender sued the broker and others for repayment.
(Interestingly, the loan bore interest at what the appeals court described as the “breathtaking” rate of 1,000% per annum.)
The broker tried to escape liability on his guaranty by claiming he had an oral understanding with the lender. It didn’t work; the court had no trouble holding that the broker was bound by his written obligation:
… [The broker's] evidence does not support a modification of the agreement, but rather consists of assertions of prior oral negotiations that contradict the written instrument he executed. …
[The broker] wants to contradict particular terms of a contract which has already been performed on [the lender's] side and of which [the broker] has already enjoyed the benefits (fleeting though they were). This is exactly what the parol evidence rule forecloses.
Wheeling v. Blumling, No. 07-1992, slip op. at 8-9 (1st Cir. Mar. 25, 2008).
What surprises me most about this case is that the court didn’t hammer the loan broker and his lawyer for making the oral-modification argument in the first place. From the facts reported in the appeals-court opinion, it looks to me like the argument was … thin (at best), and that there was no good reason for the broker’s lawyer to have made the lender spend extra time and money enforcing his rights. Maybe there’s more to it than that; I sure hope so.
Keep your legal bills down when changing jobs: Leave your former employer’s files behind
April 1, 2008
If you’re leaving a job, you can keep your legal bills down by not taking copies of your former employer’s non-public business information with you.
If you take files, it might not be clear
that you’ve done nothing wrong
You might not have any intention of using the former employer’s information for an improper purpose. You might swear up and down that you never even looked at the copies you took with you — or that you did look at the copies, but not for anything the former employer might object to.
Your former employer might not believe you. In fact, if there’s any bad blood at all between you, your former employer probably won’t believe you.
The mere fact that you took the copies might be deemed evidence of possible wrongdoing. It might be enough evidence to entitle your former employer to a trial.
A case study
For an interesting case study, read the court’s opinion in L-3 Communications Westwood Corp. v. Robichaux, No. 06-279 (E.D. La. Feb. 29, 2008) (granting in part but denying in part defendants’ motion for partial summary judgment).
In the L-3 case, two former employees (a husband and wife) some months before being fired, had backed up the entire contents of their laptops to an external hard disk. They admitted looking at source code on the backup after they were fired. The husband had also provided his father (himself a former employee) with company documents.
All three denied doing anything improper with the information. But the court held that there was sufficient evidence of possible wrongdoing to require a trial. See id., slip op. at 11-12.
Trial preparation legal bills can be killers
Trials are expensive enough for the parties, but trial preparation is what really runs up the legal bills. (The vast majority of cases settle before trial anyway.) During pre-trial prep, the lawyers for both sides will spend a lot of time reviewing documents; interviewing potential witnesses; figuring out how to present it all to the judge and jury; and arguing to the judge about what the jury should be allowed to hear and see.
You probably aren’t keen on spending that kind of money on legal fees. That being the case, you’re usually better off making it a point not to take anything with you that’s even arguably confidential to your former employer.
(It’s another story if the business information is publicly available, but that in itself can be another fight.)
In the L-3 case mentioned above, the three defendants are likely to settle the case, possibly on unfavorable terms. If they don’t settle, their legal bills, for trial preparation and the actual trial, could be devastating.
The lesson: When leaving a job, it’s usually best not to take anything with you that you’re not indisputably entitled to keep.