Think of litigation as akin to being on a battlefield. Your lawyer is like a field general charged with achieving the lawful objectives of you—the sovereign head of state. Strategy and tactics are an indelible part of what happens on a battlefield and in a courtroom. Here are some tactical observations about one particular type of litigation, employment litigation.
Think of a litigation battlefield as like two sides to a game of chess, black and white. One side is the employee, the other management. From the employee’s standpoint, preservation of income and opportunities is the typical objective, the usual strategy. Think of strategy as being like a person’s head. Tactics, on the other hand, are like the arms and legs, which carry out the instructions of the head. Achieving the employee’s aims to protect income and opportunities necessarily means analyzing the law and utilizing the element of surprise when appropriate. For example, one frequent type of employment litigation involves wage and hour acts in many states, including Massachusetts. The statutes are powerful. They often allow recovery of attorney fees and multiple damages for a harmed employee. And it’s easy for management to violate the Wage Act. Not paid everything you’re owed the day you’re fired? Violation. Owed commissions for even a day beyond the date they become due and payable? Violation.
As Chinese military strategist Sun Tzu taught in The Art of War, the element of surprise is important in battles. Most everyone instinctively knows this. Yet so few use it effectively. An employee with a Wage Act claim should sometimes file a case before serving it upon the employer, particularly when the employee knows she is on her way out. A firing after the filing could preserve and enhance claims that the firing was retaliatory, and thus put another arrow in the employee’s quiver for the litigation battlefield.
Then there’s the other side of the battlefield and the chess board, management. It should deploy countermeasures. It should plan early for potential problems. Early means before the employee is even hired. Management should also vigorously protect the company’s trade secrets. The robust defense of those secrets, which nearly every company has (such as customer lists) is a cornerstone of protecting business viability. That, in turn, is in the interest of both ownership and labor.
Advanced groundwork is critical to enhancing the prospects that management countermeasures will be effective. An employer who is sued typically has to assert counterclaims or risk losing them. Sometimes these can be asserted in another court. So if an employer is initially sued in state court, it can sometimes assert counterclaims in a new action in federal court where it is the plaintiff. This divides the battlefield. It means the employee and its lawyer (who sometimes work on a contingency basis) must now fight two fronts. This can be hard when the employee or its lawyer lacks a sufficient litigation war chest. As a practical matter, even with respect to cases being handled on a contingency basis by a law firm with significant capital reserves (or access to litigation funding capital), human nature—including for litigators—is to look for easy kills and to avoid hard fights. And so the existence of strong counterclaims can drive a global settlement on favorable terms of all claims in both cases.
Garden-variety employment lawyers are sometimes afflicted by tunnel vision. They too often aren’t thinking about litigation chess moves, such as the observation that ownership’s ability to carry on litigation is often stronger than an employee’s and can be leveraged to achieve aims. They can put in place agreements with some favorable language, but they sometimes don’t counsel clients that agreements need to be updated whenever there’s a substantial change in the law or an employee’s role. They are often too quick to settle Wage Act and other types of claims. For example, they fail to put into the employment agreement, or elsewhere in a binding contract, the payment terms for commissions to ensure that such commissions will not be “due and payable” under the Wage Act until a point later in time when more convenient from a company’s cash flow standpoint.
Attorneys representing management must get in before the problems arise. By way of analogy, if you need to defend a fortress against an attack by the Visigoths, you want to strengthen the defenses and get our countermeasures teed up well before the enemies arrive at the gates. When they arrive, you want lots of arrows and other countermeasures to deploy. You want to project—and to be—a hard target.
Employment side lawyers need to review existing employment agreements, computer usage policies and employment handbooks. If none exist, they need to prepare them with an eye towards the types of claims that could later be asserted. These include claims under the federal Computer Fraud and Abuse Act (CFAA) and Defend Trade Secrets Act (DTSA). These federal statutes can give federal courts “federal question” jurisdiction over the claims.
Other considerations management side lawyers should make include the following:
· Crafting employment agreements with CFAA and DTSA decisions in mind. The agreements should be reviewed on a periodic basis to modify when substantial changes occur and as new key decisions emerge. Practically speaking, while agreements should be updated and signed again with each new material change to an employee’s status. Yes, this means even when an employee is promoted. Oddly enough, under some caselaw, promoting an employee without getting a new employment agreement signed could mean that protections for management under the earlier agreement can be lost.
· Each employment agreement should also be updated to reflect recent changes in the law. Massachusetts recently made changes to its non-compete law. Counsel should assess the extent to which strong non-disclosure provisions may nonetheless still be allowable.
· Company HR departments should be kept up to speed on developments and best practices.
· Pursuant to part of the DTSA, 18 U.S.C. § 1833(b)(3)-(4), notice of whistleblower immunity must be given in any contract or agreement with an employee that governs the use of a trade secret or other confidential information, including any individual working as a contractor or consultant. If there’s no notice, there’s also no possibility of treble damages and attorney fees in a DTSA counterclaim.
· Agreements should prohibit employees retaining confidential material after separation. Departing employees should sign statements that they have retained no files. See, e.g., Advanced Micro Devices, Inc. v. Feldstein, No. CV 13-40007-TSH, 2013 WL 10944934, at *4 (D. Mass. May 15, 2013) (analyzing a fact pattern in which an employee “was asked to sign a statement confirming that he had no confidential [company] information in his possession” but that “[h]e did so despite retaining the two external hard drives containing complete images of his [company]-issued computers”).
· To the extent practical, data should be “siloed,” such that employees have access only to relevant electronically stored information (ESI) needed for their role.
· Only premium cloud storage services with auditing features should be utilized. This permits a forensic firm and counsel to review what actions an employee was undertaking prior to separation. Violations of a computer usage policy could then be actionable under the CFAA and perhaps the DTSA.
· Every company should have a systems security audit performed by a forensics firm. Suggested changes to enhance security should be implemented, to the extent financially practicable. Too often, even in-house IT departments and employees are not sufficiently trained to assess system security weaknesses. They are more often focused on establishing and maintaining efficient IT solutions.
· Every company mark their most confidential documents “confidential” to enhance arguments that an employee knew or should have known that such information was protected. This should be dovetailed with employment agreement and employee handbook provisions.
· Employers need provisions in employment agreements and employee handbooks to the effect that company data will not be destroyed at any time but will be delivered to the company upon separation.
· There should be a separation exit interview to go over a checklist of action steps to include retrieval of company information and to have statements signed concerning the non-retention of company trade secrets.
· Every company needs a “WISP,” a written information security plan. This could enhance counterclaim prospects under the CFAA and DTSA.
Once litigation begins or is contemplated, attorneys on both sides must be prepared to act decisively to enhance their clients’ chances for success. In the modern era discovery has become a focal point in litigation. The dramatic rise of electronically stored information (ESI) and the explosion of electronic communications across many platforms means that there is more information that needs to be preserved. Properly done, this process can also enhance the prospects to bring “spoliation” motions against the other side, which may have been asleep at the switch. Document preservation notices should be sent to clients and opponents early. Knowing your side’s documents, and the other’s, is essential. You would be surprised how frequently people (even very smart and sophisticated ones) make admissions that can be used later.
In addition to document preservation, organization and analysis, another early consideration for both sides must be the selection of the most compelling experts. Retention of key experts early adds more arrows to the litigation quiver. It aids each stage of litigation, from analysis to demand to commencement to mediation to trial. The process can include retaining experts on both liability and damages. It also includes a consideration of what experts will be used for consultation purposes and which will be used to testify at trial. These are very different functions. Experts and the lawyers also need to be using animation, graphics and visual presentation specialists to the fullest practical extent to present evidence in a compelling and understandable way to a lay jury and judge. In many cases, telling a story through easily understood visual timelines underscores the theme of the case and helps to cement one side’s version of the factual narrative, sequence and timing of key events underlying and supporting the claims or defenses.
Litigation, including employment litigation, is like a battlefield. Be prepared to win. Consider your end-game and strategy. Deploy well-thought-out tactics. Put yourself in in a favorable position at the earliest practical stage. Be organized. Move quickly. Use overwhelming “force” where appropriate.