Litigating who’s entitled to what when an employee leaves a company is a practice best left to the specialists, and a chancy undertaking for most lawyers.
That was the unanimous view of a panel of experts in an hourlong continuing legal education webcast, “Departing Employee Litigation,” sponsored by The Texas Lawbook.
“It’s a nuanced area of the law,” said Dave Wishnew of Crawford Wishnew Lang in Dallas. Departing employee litigation takes in an array of workplace issues – including noncompetition agreements, confidentiality promises, protection of trade secrets, breach of contract, breach of fiduciary duty – governed under an assortment of state and federal laws. It’s a niche that even “very excellent litigators who don’t regularly practice in this area” can find daunting, Wishnew said.
Kelly Vickers, an associate general counsel at Kimberly-Clark Corp. and, until April 2020, a partner with Locke Lord in Dallas, concurred.
“Even when you have a very sophisticated litigation department like we have at Kimberly-Clark, you won’t necessarily have lawyers who have practiced in this space,” she said.
“Just because you have a provider [of outside counsel] who you know and have under contract, and they give you most of your legal services under a set rate, they may not be the right team of lawyers.”
The webcast was moderated by Mark Shank, senior counsel with Diamond McCarthy in Dallas and a well-known arbitrator and mediator. The other participants were Dallas County District Court Judge Maricela Moore and Greg McAllister of the Rogge Dunn Group in Dallas.
In conjunction with the CLE session, The Lawbook has partnered with Shank, Wishnew and McCallister to publish a 2022 update to their book, Texas Litigators’ Guide to Departing Employee Cases.
It’s available here. The price is $99 with forms, $50 without.
Noncompetition cases are singularly demanding, Wishnew said, because “they’re fast paced.” A plaintiff company’s first step after filing suit is typically to seek a temporary restraining order, then a temporary injunction, to freeze potentially damaging actions by the departed employee.
“Most cases in business litigation can go a year or two years-plus,” he said. “Noncompetes take 30 to 90 days” to reach a temporary injunction hearing.
Everything gets compressed along the way. “Instead of 30 days to respond to discovery, you’ll have four or five.”
“You have to move extremely fast,” added McAllister. “You’ve got expedited discovery. You’ve got a handful of depositions you need in order to make your case at a temporary injunction hearing or a preliminary injunction hearing in federal court. And you’ve only got a little bit of time to get those ready.”
Wishnew said he advises corporate clients to “immediately triage,” digitally speaking, whenever an employee with access to sensitive information leaves.
“Remove the employee’s access. Preserve what’s been done. Engage your IT provider immediately and capture the employee’s email, capture what they did on their computer. Know whether they sent themselves emails with your documents or information.” Don’t overlook social media, where, every second of every day, very smart people say very dumb things.
“The things that people post and do on social media these days are often a good source of evidence,” Wishnew said.
With a few keystrokes, a network connection and a thumb drive, departing employees can easily filch trade secrets and other confidential information – customers’ purchase histories, price lists, marketing plans, sales strategies, employee evaluations and much more.
Fortunately, McAllister said, “it’s been my experience that employees are not very good criminals. They’re not used to being criminals. They’ll steal stuff by emailing it to themselves. Then they’re shocked when I find it. They say, “How did you figure it out?’ Well, we looked in your email. Real sleuth detective here.”
Shank cautioned employers to make sure they’re not bound by an arbitration agreement before suing a former employee. That sounds obvious. But what isn’t obvious, he said, is the number of places where an arbitration clause may lurk.
Even if the worker’s employment contract makes no mention of arbitration, the company/s employee handbook may require it. An arbitration agreement may be buried in the onboarding documents the employee received when he or she started with the company, which may have been in the previous century. (And whoever who signed it in behalf of the company may have relocated long ago from HR to Gehenna.)
“It’s kind of embarrassing to go down to the courthouse and seek a TRO,” Shank said, only to learn that your company agreed to arbitration instead.
Moore shared a list of “practical tips” for lawyers seeking TROs in her court. Many, she said, are on “the checklist that good practitioners” follow all the time, but they’re particularly important when she’s being asked, usually on short notice and a wispy written record, for an order that can prevent some imminent, irreparable harm. Time is of the essence, and the court has little to spare.
On most days, “I’m drinking out of a fire hydrant,” she said. “If I have a jury in the box, I might give you 20 minutes because of the urgency of the matter.
“The lawyers have been living this for two weeks, three weeks, maybe longer. You’ll know your facts backwards and forwards. It’s helpful to put yourselves in the mindset of the judge and how little we know about your case.
“Get us up to speed quickly. With details. With facts. With events. With names.”
PowerPoints help. So do timelines. “What was the date of employment? What was the date that the contract was signed?”
Avoid alphabet-soup acronyms. “Oftentimes, a party will say ‘LCJ.’ And I have to stop and ask, ‘Who is LCJ? What is LCJ?’ ‘Well, that’s what we call this company, but it’s actually the parent company. Or it’s a subsidiary.’ All the court wants to know is who you’re talking about.”
Lastly, and here I am paraphrasing the judge, don’t be an ass.
“Remove all inflammatory arguments from your pleading,” she said. “Leave out the tone. It’s very unhelpful to the court. It makes it more difficult to get to the substance.”