Those of you who attended our seminar on protecting confidential and trade secret information last Spring may recall our discussion about a trade secret misappropriation case involving a Twitter account. In that case, PhoneDog v. Kravitz, 2011 U.S. Dist. LEXIS 129229 (N.D. Cal. 2011), a product news and review company, PhoneDog, claimed it issued Twitter accounts to its employees so that they could publish content for users to support PhoneDog’s business. When one employee, Kravitz, left PhoneDog, he refused to provide PhoneDog with access to the Twitter account he was assigned, changed its handle to delete references to PhoneDog, and continued to use it (with its 17,000 followers) for personal purposes.

PhoneDog filed a trade secret misappropriation claim against Kravitz claiming that the Twitter account was its trade secret and that it had incurred damages of more than $250,000 given the large number of “followers” the Twitter account had attracted. In denying Kravitz’s motion to dismiss this claim, the federal district court held that PhoneDog had stated a claim for trade secret misappropriation because: (1) it had adequately identified its alleged trade secret (i.e., the Twitter account and password) and (2) Kravitz refused to return control of the account/password to its claimed owner, PhoneDog.

This week, several news outlets are reporting that PhoneDog and Kravitz have settled their dispute after more than a year of litigation. (See, e.g., http://mountpleasant-sc.patch.com/articles/twitter-suit-settled-out-of-court.) Although the terms of the settlement appear to be confidential, Kravitz will apparently retain control of the subject Twitter account.

Could this lawsuit (and its outcome) have been avoided by the employer? Maybe. Although the Court’s file is silent on this issue, it does not appear that PhoneDog had a social media policy in place at the time it issued the Twitter account to Kravitz. (This may have been because Kravitz began working for PhoneDog just as social media sites like Twitter were gaining popularity.)

Employers, especially those who rely on employee use of social media to further their business interests, should have a written social media policy in place. Their employees should be made aware of the policy at the time of their hiring and provided periodic reminders. The Policy should make clear that: (1) any social media accounts that are issued by the employer or opened at its direction to further its business, remain the property of the employer; and (2) the employee must return access to the account (including providing any passwords) to the employer upon the termination of the employment relationship. Had PhoneDog had such a policy in place, it may have strengthened its argument that it owned the Twitter account and could have possibly obtained an injunction from the Court barring Kravitz from further use of it.

By:   James Kachmar

Those of you who attended our seminar on protecting confidential and trade secret information last Spring may recall our discussion about a trade secret misappropriation case involving a Twitter account. In that case, PhoneDog v. Kravitz, 2011 U.S. Dist. LEXIS 129229 (N.D. Cal. 2011), a product news and review company, PhoneDog, claimed it issued Twitter accounts to its employees so that they could publish content for users to support PhoneDog’s business. When one employee, Kravitz, left PhoneDog, he refused to provide PhoneDog with access to the Twitter account he was assigned, changed its handle to delete references to PhoneDog, and continued to use it (with its 17,000 followers) for personal purposes.

Continue Reading A Reminder to Employers of the Need for Social Media Policies

“Suitable seating” class actions have been on the rise in the last couple of years in California. The first “suitable seating” class action is currently under review by a trial judge in San Francisco. However, in the meantime, the Ninth Circuit has decided to consider a related case against Wal-Mart, where plaintiffs’ attorneys are claiming damages in the amount of $150 million. The appeals court has agreed to review class certification of roughly 22,000 California cashiers who claim they were denied a place to sit in violation of state labor regulations. It is no wonder businesses are fleeing to the greener pastures of Texas and other states that do not exhibit an abject hatred toward employers. Hopefully these courts will consider the impact of their individual decisions and provide California’s embattled employers with some relief (or at the very least some clarity). See: http://www.law.com/jsp/law/sign_me_in.jsp?

One focus of this blog is how an employer’s use of non-compete agreements often runs afoul of California’s Business and Professions Code section 16600. Generally, the employer finds that its “non-compete” agreement will be held unenforceable by a court should it seek to enforce one against a former employee. But what can happen when one employer “agrees” with another employer not to recruit or hire each other’s employees?

On November 16, 2012, the U.S. Department of Justice and California’s Attorney General filed separate lawsuits against eBay, Inc. alleging violation of antitrust laws arising out of such an agreement. (The State of California’s lawsuit also names Intuit, Inc. as a co-conspirator.) The lawsuit arises out of an investigation conducted by the U.S. Department of Justice in 2009-10 into “no-hire” arrangements between high-tech firms in Silicon Valley.

The complaints allege that between 2006-2009, eBay and Intuit had a “handshake” agreement that they would not recruit or hire each other’s employees. This alleged agreement arose out of a “war for talent” that Silicon Valley firms experienced while competing for a limited number of employees with highly specialized knowledge, skills and experience in the technology industry. The “handshake” agreement was apparently the subject of several emails between eBay and Intuit executives that are cited in the complaints. While the agreement appears to initially have begun as a no-recruiting policy, it apparently morphed into a “no-hire” agreement, even when an applicant (employed by one of the companies) approached the other for employment unsolicited. The complaints allege that the agreement between eBay and Intuit harmed the market for these employees by limiting their job mobility and “affected employees’ ability to secure better compensation, benefits, and working conditions.”

Similar lawsuits were filed by the U.S. Department of Justice in 2010 against Adobe Systems, Inc., Apple, Inc., Google, Inc., Intel Corporation and Pixar. Those lawsuits were apparently resolved when the companies agreed not to engage in further “no-hire” agreements. (A separate class action civil lawsuit brought by affected employees is still pending against these companies.) eBay is alleged to have halted its “no-hire” agreement with Intuit in or about 2009 when it learned of the federal government’s investigation into such agreements.

Employers are again reminded to proceed with caution when considering whether and how to restrict a former employee’s ability to compete.

By:  Chelcey E. Lieber

Let’s say an employee was “completely incapacitated” and needs to take leave due to a back injury. The employee is granted leave, but then terminated while on leave. This sets the perfect stage for a successful interference and retaliation claim, right? The Court in Jaszczyszyn v. Advantage Health Physician Network disagreed (full opinion may be found here: http://www.ca6.uscourts.gov/opinions.pdf/12a1152n-06.pdf).

Continue Reading Facebook Pictures Enough for the Sixth Circuit to Uphold the Employer’s “Honest Belief” Defense (Sara Jaszczyszyn v. Advantage Health Physician Network)