Recently in Corporate Disputes Category

March 6, 2014

Court Stays Action Pending Arbitration

A recent order from a federal district court in Massachusetts sheds light on the analysis courts perform when addressing whether to stay a civil action pending arbitration. In MOCA Systems, Inc. v. Bernier and Penley Systems, LLC, the court considered the defendants' motion to stay an action pending arbitration. The defendants proffered only an unsigned employment agreement that included an arbitration clause, and testimony suggesting the agreement was valid. The court allowed the motion and stayed the litigation.

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February 13, 2014

No Claim for Misappropriation of Trade Secrets That Are Inadequately Protected

Generally, a company can protect its trade secrets from misappropriation by taking steps to ensure that such information is not easily accessible or otherwise easily disseminated. Requiring employees and others who are exposed to customer lists, business processes, and the like to sign confidentiality agreements is just one way to be vigilant in trade secret protection. However, as highlighted in a recent superior court decision, in the absence of a signed confidentiality agreement, businesses must take other reasonable steps to keep confidential information confidential, or risk that their trade secrets will be stolen - with no legal recourse against the trade secret thief.

In CRTR, Inc. v. Lao, CRTR hired an independent contractor without requiring him to sign a confidentiality agreement. The contractor was the nephew of a CRTR customer who had commenced negotiations with CRTR to purchase the business. When the negotiations failed, the contractor stole a number of trade secrets from the CRTR, and CRTR sued both the contractor and his uncle for misappropriation. When the contractor moved for summary judgment, the court found that CRTR had properly identified the stolen material and had demonstrated that the material would cause damage to the company's interest if the information was shared. Despite that finding, the court granted the contractor's summary judgment motion.

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January 30, 2014

Non-Compete Case: No Competition, No Preliminary Injunction

A federal district court in Massachusetts recently denied a corporation's motion to preliminarily enjoin its former employee from working at an alleged competitor corporation, as was prohibited in the employee's non-competition agreement. The court's decision turned on the fact that the plaintiff never proved that the defendant corporation was in fact a competitor in the marketplace, and thus did not satisfy the requirements that would warrant a preliminary injunction.

In Upromise, Inc. v. Peter Angus and Intuition Systems, Inc., Upromise, Inc. ("Upromise") specialized in servicing college savings plans, and was the former employer of Peter Angus ("Angus"). Angus left Upromise, and found a position with Intuition Systems, Inc. ("Intuition"), a company that focused on providing prepaid service of college savings plans. Upromise filed a lawsuit and a motion for preliminary injunction against Angus and Intuition, seeking (1) to enjoin Angus from accepting employment with Intuition, an alleged competitor of Upromise, for a period of one year pursuant to Angus' non-competition agreement with Upromise, or (2) specific performance of a negotiated settlement agreement to prevent Intuition from hiring Angus.

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January 23, 2014

Life After Death for Delaware Corporations

The law has frequently regarded corporations as akin to persons, treating them as entities separate from their owners and granting rights to and imposing obligations upon them quite similar to those imposed on individuals. However, a recent Delaware Supreme Court decision demonstrates how the Delaware statutes have granted Delaware corporations a type of corporate immortality - but only when it comes to their potential liability to third parties.

In the case, In the Matter of Krafft-Murphy Company, Inc., the Delaware Supreme Court considered third parties' right to pursue claims against a dissolved corporation, and any time limitations placed upon that right by Delaware's statutory corporate dissolution scheme. Beginning in 1989, the defendant corporation was named as a defendant in hundreds of asbestos personal injury lawsuits in multiple jurisdictions, all of which the corporation's insurance companies have been defending on its behalf. In 1999, the corporation formally dissolved, and its only presently remaining assets are their unexhausted insurance policies. The plaintiffs instituted the Delaware case seeking the appointment of a receiver for the dissolved corporation, to enable them to lawfully pursue their claims against the dissolved entity.

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January 17, 2014

A Corporate President's Power May Be Inherently Limited

In a recent decision, the Worcester Superior Court ruled that the president of a corporation has limited power with respect to the firing of corporate officers. The court explored the powers of a corporate president and his ability to hire and fire at-will employees under the guise of his general authority. In that case, the court held that the president's firing of the vice president without support from the board of directors was ineffective.

In Arklow, Inc. et al. v. Weadock, the court addressed the issue of whether a president's unilateral termination of the vice president was effective. Arklow, Inc. and Arlow, LP sought injunctive relief against Daniel Weadock to remove him from his position as the manager at the International, a local golf course owed by the partnership. This court proceeding shortly followed the decision of Bryan Weadock, the president of Arklow, Inc., to fire Daniel Weadock, the vice president at Arklow, Inc. and manager of the International. The court's opinion involved a discussion of the principals of corporate law, as it analyzed the difference between Daniel's managerial role and his role as vice president.

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