The Massachusetts Court of Appeals recently reversed a jury finding of tortious interference with advantageous customer relations on the grounds that it was not supported by the evidence. A distributor (Brewster) of wallpaper products brought a breach of contract suit against its supplier (Blue Mountain) after the supplier failed to deliver its products in a timely manner. Although the distributor was awarded substantial damages on the breach of contract claim, the Appeals court reversed on the tortuous interference claim due to lack of evidence.

Here is an excerpt from the court’s decision (full text can be found here):

E. Tortious interference. The deferential standard of review of jury’s verdicts does not insulate the finding that Blue Mountain tortiously interfered with Brewster’s advantageous relationships with its customers, which we reverse because Brewster’s evidence failed to establish the elements necessary to support this claim.

“There are four elements required to establish interference with advantageous business relations: (1) the plaintiff has a business relationship for economic benefit with a third party, (2) the defendants knew of that relationship, (3) the defendants interfered with that relationship through improper motive or means, and (4) the plaintiff’s loss of the advantage resulted directly from the defendants’ conduct.” McNamee v. Jenkins, 52 Mass. App. Ct. 503, 508 (2001). The “improper motive or means” element requires proof of the defendant’s “actual malice,” i.e., a “spiteful, malignant purpose, unrelated to the legitimate corporate interest.” Shea v. Emmanuel College, 425 Mass. 761, 764 (1997), quoting from Wright v. Shriners Hosp. for Crippled Children, 412 Mass. 469, 476 (1992).

Brewster failed to make a case that would permit the jury to find either actual malice or “loss of the advantage.” Brewster offered no evidence establishing that any specific customers terminated their dealings with it because of Blue Mountain’s unreliable service on GenCorp lines, nor did it present any documentation indicating that any customers cancelled their orders on that account. Moreover, as discussed below, Brewster failed to mitigate its damages and maintained no records of whether customers who cancelled orders for GenCorp wallpaper because of undue delay selected substitute Brewster products, which was conceded to be a common occurrence.

Finally, Brewster’s evidence failed to demonstrate that Blue Mountain’s actions challenged in this litigation were entirely malevolent and unrelated to any legitimate corporate interest. Even assuming that the facts revealed Blue Mountain to be motivated by a desire for financial or competitive gain at Brewster’s expense, or by its officers’ personal dislike of Brewster and its personnel for whatever reason, no inference of the requisite spiteful and malignant ill will would be warranted. See United Truck Leasing Corp. v. Geltman, 406 Mass. 811, 817 (1990); Boothby v. Texon, Inc., 414 Mass. 468, 487-488 (1993); King v. Driscoll, 418 Mass. 576, 587 (1994).

. . .

BREWSTER WALLCOVERING COMPANY vs. BLUE MOUNTAIN WALLCOVERINGS, INC. (Massachusetts Appeals Court; No. 05-P-1044. Norfolk. September 20, 2006. – April 6, 2007).

I often get asked by people, how much does it cost to incorporate? Here is a quick overview of the various filing fees that you can expect to pay to get your business up and running:

Massachusetts corporations pay a minimum fee of $275 on formation and then, after the first year, an annual fee of $125 is due. There is also an annual minimum corporate excise tax of $456 that all corporations pay in Massachusetts.

Massachusetts Limited Liability companies pay a formation fee of $500 and then an ongoing annual fee of $500 but there is no excise tax due. Note that if you incorporate under the laws of another state (Delaware
is the most popular) and are doing business in Massachusetts, you will need to pay a one-time registration fee and an ongoing annual fee to qualify to do business in the state. Limited Liability Companies need to pay a $500 registration fee and an ongoing $500 annual fee. Corporations formed in other states need to pay a $400 registration fee and an ongoing annual fee of $115.

That leaves the legal fees, to form a Massachusetts corporation my office charges a flat fee of $700 for legal services. Because LLCs are more complex they are billed at an hourly rate and the fees are usually a little bit higher than for corporations. These fees do not include buy-sell or other stockholder’s agreements you should consider entering into in connection with the formation of your business. Please see our law web site (www.inventurelaw.com) for contact information.

The Massachusetts Supreme Judicial Court recently considered a case involving the attempt by one party to recover amounts paid under a contract that was later determined to be illegal. The facts of the case involved a one page contract that the National Association of Government Employees, Inc. (NAGE) entered into with a consultant to win a government award of a contract to develop real estate. The contract called for the payment of $250,000 if and when the development was “approved and built.” After NAGE won the contract it paid consultant $200,000 with the balance apparently due when the project was completed. The project was not, however, completed and litigation ensued. Under Massachusetts statute, contracts that are contingent upon a government decision are unenforceable. The issue before the court was whether NAGE was entitled to recover the $200,000 it paid to the consultant. The lower appeals court said yes, but the SJC reversed.
Here is the court’s summary of the law in this area (full text can be found here):

[. . .]

3. Recovery of money paid pursuant to an illegal agreement.

a. The general rule. “[I]t has . . . long been settled that the law will not aid either party to an illegal contract to enforce it against the other, neither will it relieve a party to such a contract . . . who seeks to reclaim his money or whatever article of property he may have applied to such a purpose.” Atwood v. Fisk, 101 Mass. 363, 364 (1869). See Council v. Cohen, 303 Mass. 348, 354 (1939), quoting Berman v. Coakley, 243 Mass. 348, 350 (1923) (”courts will not aid in the enforcement, nor afford relief against the evil consequences, of an illegal or immoral contract”). The policy underlying this rule is that “[t]he suppression of illegal contracts is far more likely in general to be accomplished, by leaving the parties without remedy against each other.” Atwood v. Fisk, supra. Accordingly, the general rule is that a court leaves parties to an illegal contract in the same position as it finds them. See Duane v. Merchants’ Legal Stamp Co., 227 Mass. 466, 468-469 (1917); Huckins v. Hunt, 138 Mass. 366, 366-367 (1885); Atwood v. Fisk, supra.

[. . .]

The general rule that courts will not grant relief to parties to an illegal contract is subject to an exception:

“where the parties are not in equal fault as to the illegal element of the contract, or, to use the phrase of the maxim, are not in pari delicto, and where there are elements of public policy more outraged by the conduct of one than of the other, then relief in equity may be granted to the less guilty.”

Berman v. Coakley, supra.

[. . .]

We have required more than a slight difference in culpability before we will grant equitable relief to a party to an illegal contract. The cases where we have done so generally fall into two categories. The first comprises cases “in which one of the parties has, by an illegal act, taken advantage of and oppressed the other.” Berman v. Coakley, supra at 351, quoting Inhabitants of Worcester v. Eaton, 11 Mass. 368, 376 (1814) (allowing plaintiff equitable relief where defendant fraudulently coerced him into unlawful agreement to suppress criminal prosecution). The second involves cases where the provision of law rendering the contract illegal was clearly intended to benefit one party over the other, i.e., the public policy is intended to protect persons of the class to which one party belongs. See Council v. Cohen, supra at 355 (allowing plaintiff to recover interest paid on mortgage contravening Federal home owners’ loan act because purpose of that act was “to aid the homeowner and not the mortgagee”).

[. . .]

As the Supreme Court of Illinois has observed, granting relief to a less guilty party to an illegal contract is a discretionary decision grounded in public policy, not a matter of right:

“Although courts will generally not enforce contracts which are against public policy where the parties are in pari delicto, this is not to say a court must enforce an agreement when the parties are not in pari delicto. ‘[T]he interest of the public, rather than the equitable standing of the individual parties, is of determining importance.’”

O’Hara v. Ahlgren, Blumenfeld & Kempster, 127 Ill. 2d 333, 348 (1989), quoting Parish v. Schwartz, 344 Ill. 563, 572 (1931). See 8 Williston, Contracts § 19:79 (4th ed. 1998). We have said that the relief in such cases “is given to the public through the party.” Council v. Cohen, supra at 355. Here, the public interest weighs against granting [the party engaging the consultant] relief.

[. . .]

We have in the past prohibited parties from obtaining results through tort law that were unavailable in contract. See, e.g., Harrison v. NetCentric Corp., 433 Mass. 465, 478 (2001) (noting that plaintiff who could not successfully sue corporation in contract could not recover from corporation’s alter ego in tort). In addition, the fact that a contract is unenforceable as against public policy generally forecloses all remedies, regardless of the label, unless a party can show that it was not equally at fault. See Capazzoli v. Holzwasser, 397 Mass. 158, 160 (1986) (contract in consideration of plaintiff’s abandonment of her marriage held unenforceable “on a contract, quantum meruit, or any other theory”). See also T.F. v. B.L., 442 Mass. 522, 530 n.8 (2004) (party to unenforceable contract to create child could not recover child support on alternative theory of promissory estoppel); Lowell v. Massachusetts Bonding & Ins. Co., 313 Mass. 257, 272 (1943) (no recovery in quantum meruit where contract illegal for failure to comply with statutory requisites).

[. . .]

ALFRED L. ARCIDI vs. NATIONAL ASSOCIATION OF GOVERNMENT EMPLOYEES, INC. (SJC-09663, November 7, 2006).

The Sunday New York Times business section has a good roundup of the various issues that arise in signing non-compete agreements.  In Massachusetts it is common, particularly among high tech companies, to require all employees to sign some form of non-competition agreement (along with other standard employee agreements involving confidentiality and assignment of inventions made while at work). Here is the full text of the NYT article:

January 21, 2007
Career Couch
The Noncompete Clause: Balk at Your Own Risk
By MATT VILLANOQ. You’ve been offered a new job, and your prospective employer wants you to sign a noncompete agreement, but the document makes you uneasy. What should you do?

A. Take some time to scrutinize the terms. Robin Bond, managing partner of Transition Strategies, a law firm in Wayne, Pa., says it’s perfectly reasonable to ask to review the details of the agreement before accepting the job. When it comes to legal documents, you can never be too careful,” Ms. Bond said. “The last thing you want to do is sign something that could affect your ability to earn a living.”

Q. What do noncompete clauses cover?

A. Generally speaking, these agreements are one-sided contracts designed by companies to prevent employees from competing with them after leaving the fold. Paula Weber, a partner at the San Francisco law firm Pillsbury Winthrop Shaw Pittman, said that companies generally use the documents to protect trade secrets, customer contacts and other forms of intellectual property. When a company hires an employee, that company gives the person all sorts of valuable and one-of-a-kind insider information,” she said. “The noncompete is one way for the company to protect whatever assets are transferred.” Most noncompete agreements limit what employees can do once they leave, whom they can do it for and where they can do it. In many cases, Ms. Weber added, the documents preserve these restrictions for a defined period that rarely exceeds three years.

Q. How common are noncompete agreements today?

A. That depends on where you live and on the industry in which you work. Noncompete agreements are governed by state laws. They are permitted in Florida and New York, for example, while California courts have ruled them to be illegal restraintsNoncompete agreements are most prevalent in industries where intellectual property is at a premium, like software development.Ms. Weber noted that companies in some industries might also require the signing of nonsolicitation clauses, which prevent employees who leave a company from recruiting former colleagues. Both agreements fall under a category of contracts known as “restrictive covenants,” she said.

Q. Are the details of noncompete documents negotiable?

A. They might be. Chris Farella, a partner at Stahl Farella & Sarokin, a law firm in Westfield, N.J., said that, as always, the more a company wants to hire a particular person, the more leverage that person has. “If you’re bringing something to the table that they can’t live without, a company will be far more likely to bend,” he said. Mr. Farella added that issues like the agreement’s duration or the geographic area covered by the agreement were the easiest to negotiate. Usually, however, companies are hesitant to make concessions on an individual basis, Mr. Farella said. John Reddish, president of Advent Management International, a consulting firm in Drexel Hill, Pa., noted that some employers might view a request to modify a noncompete agreement as a hostile act, and could withdraw a job offer.

Q. What can happen if you violate a noncompete agreement?

A. An expensive lawsuit, for one thing. Because noncompete clauses are legal contracts, employers have the right to sue any employees they suspect to be in violation. John J. Myers, a partner at Eckert Seamans Cherin & Mellott, a law firm in Pittsburgh, said cases could drag on for months, presenting challenges for employees with limited finances. Mr. Myers added that judges deciding in favor of employers could enjoin, or stop, an employee from working for the new company. “A court will award compensatory damages, such as lost profits, in addition to issuing an injunction prohibiting the violation of a restrictive covenant,” he said. “In other words, the court will put the person out of work.” Breaking a noncompete agreement can lead to other troubles as well. Bryan Cleveland, a lawyer at Ferrell Worldwide in Miami, said that a former employer with whom you had a noncompete agreement could tell your prospective employer that hiring you would make the company an accessory to a crime. The tactics can get pretty strong-armed at times,” Mr. Cleveland said. “From a company’s perspective, pointed threats can be just as damaging as actual litigation.”

Q. Is there a way to avoid these issues altogether?

A. Not if an employer insists on a noncompete agreement.

Peter Polachi, managing partner at Polachi & Company, an executive search firm in Framingham, Mass., says that because a noncompete agreement has such bearing on future employability, it should be regarded as a crucial facet of a job offer — equivalent to factors like pay and benefits packages. D. Kevin Berchelmann, president of Triangle Performance, a consulting firm in Spring, Tex., says that if a prospective employer insists on a signed agreement, you have a choice: approve the document or decline it and start your job search all over again. “Noncompete agreements are not designed to be win-win for employees,” he said. “No matter how much you may not like the idea of a noncompete, if you want the job, you may have to sign.”
 

The AP reported on a case in Massachusetts in which the Panera Bread Company attempted to enforce a provision in its shopping mall lease that bans rival sandwich shops to stop a mexcican fast food chain from moving into the same mall. Here is the short AP write up on the case:

Massachusetts court decides a burrito is not a sandwich

(Worcester, Massachusetts-AP) November 10, 2006 – This is not generally the stuff of legal scholars. But a Massachusetts judge is using wisdom worthy of Solomon to settle a major dispute.

The question at hand: Is a burrito a sandwich? The judge’s ruling: No.

Panera, a popular chain of bakery-cafes, brought the case over one of its locations in a suburban Boston mall. Panera tried to stop Mexican restaurant chain Qdoba Mexican Grill from moving into the mall, arguing its lease bans rival sandwich shops.

Lawyers for Panera went into court insisting a flour tortilla is bread, so a burrito is a sandwich. Qdoba brought in a respected chef who calls that “absurd.”

Citing the testimony – plus Webster’s Dictionary – the judge is ruling in Qdoba’s favor.

Minority investors in a closely held business often find that they have little control over the direction of the company, with most corporate action often requiring only a majority vote at the shareholder or board level. That is why venture capital investors typically create a separate class of preferred stock that gives them a greater degree of control over corporate decisions including board representation and approval rights for significant corporate actions including the hiring of senior management.

Companies are often, however, reluctant to agree to board seats or issue preferred stock unless the investor is making a substantial capital investment. In those situations where board representation is not an option, minority investors might consider putting in place contractual obligations to participate in the affairs of the company and get regular updates on how the company is performing. This type of agreement is referred to as a Management Rights Agreement and, although it is an imperfect alaternative to other forms of control, it gives the investor the opportunity for investors to stay informed about the what is going on at the company. A Management Rights Agreement is between the company and the individual investor and can provide the investor with the right to:

• Consult and advise management
• Review annual operating plans
• Receive regular updates from management on progress against plans
• Have access to management
• Examine the books and records of the company
• Receive all board of directors notices, minutes, and materials
• Make presentations and address the board of directors

Here is some sample language I use in our forms:

If Investor is not represented on Company’s Board of Directors, Investor shall be entitled to consult with and advise management of the Company on significant business issues, including management’s proposed annual operating plans, and management will regularly make itself available to meet with Investor regularly during each year at the Company’s facilities at mutually agreeable times for such consultation and advice and to review progress in achieving said plans.
Investor may examine the books and records of the Company and inspect its facilities and may request information at reasonable times and intervals concerning the general status of the Company’s financial condition and operations, provided that access to highly confidential proprietary information and facilities need not be provided.
If Investor is not represented on the Company’s Board of Directors, the
Company shall, concurrently with delivery to the Board of Directors, give a representative of Investor copies of all notices, minutes, consents and other material that the Company provides to its directors, except that the representative may be excluded from access to any material or meeting or portion thereof if the Board of Directors determines in good faith, upon advice of counsel, that such exclusion is reasonably necessary to preserve the attorney-client privilege, to protect highly confidential proprietary information, or for other similar reasons. Upon reasonable notice and at a scheduled meeting of the Board or such other time, if any, as the Board may determine in its sole discretion, such representative may address the Board with respect to Investor’s concerns regarding significant business issues facing the Company.

A three-person arbitration panel ruled against Massachusetts Mutual Life Insurance finding that the company’s former CEO, Robert O’Connell , did not breach his fiduciary duty as was alleged by the board of directors and could be entitled to benefits totaling $50 million. The decision came to light when MassMutual filed an appeal of the arbitration decision in Massachusetts court. Here is the NYT write-up on the case:

Case of fired chief signals that axes can be swung unwisely
By Julie Creswell The New York Times

Published: October 22, 2006
NEW YORK Amid allegations of extramarital affairs with female employees, illegal activity in trading accounts, and the misuse of company aircraft, Robert O’Connell was unceremoniously fired for cause as chief executive of Massachusetts Mutual Life Insurance by its directors in June 2005.

Now a three-person arbitration panel has found that O’Connell did not breach his fiduciary duties to MassMutual and that he is owed benefits that could reach $50 million, his lawyers say.

The seats filled by corporate directors have never been hotter. Directors have come under fire for not being vigilant enough when it comes to accounting practices or sky-high pay packages for executives. In the wake of the Hewlett-Packard upheaval, directors are in the spotlight over how they conduct investigations.

The MassMutual episode, though, could illustrate how boards, in an effort to appear tough on corporate malfeasance, might need to pay more attention to the process of dismissal.

The arbitration panel said that O’Connell had in fact had affairs with two female employees, made millions in profit in a deferred compensation account by trading using closing prices from the day before, and perhaps even stepped over the line in use of the company aircraft.

But none of these acts constituted “willful gross misconduct” on his part or resulted in “material harm” to the company, the arbitration panel ruled.

MassMutual executives declared the panel’s findings “incomprehensible” and inconsistent with good corporate governance. On Friday, the company filed suit in a Massachusetts court to appeal the panel’s finding, which was made last month but not disclosed until Friday.

O’Connell’s lawyers declared victory.

“We think it is a total rebuke of MassMutual’s position in this matter and a total victory and vindication for Robert O’Connell,” said Michael Keating, a lawyer for O’Connell.

“The panel rejected every basis that had been asserted as grounds for a for- cause termination.”

The way the board investigated O’Connell’s sexual behavior drew particular criticism from the arbitration panel. The board investigated after O’Connell’s wife at the time, Claire O’Connell, said she suspected he was having an affair with an executive vice president of the company. The inquiry concluded that there was not enough evidence, and the board issued a letter in April 2004 agreeing not to reopen the matter unless there was new evidence of an affair and then only with the full approval of the board.

Starting in December 2004, the chief executives of two MassMutual subsidiaries and others began contacting members of MassMutual’s board threatening to resign if O’Connell remained as chief executive. The board members encouraged them to hold off on doing so.

James Birle, a director, contacted a lawyer, Dennis Block, in February 2005. He began conducting interviews of employees, although his firm, Cadwalader Wickersham & Taft, was not formally retained by the governance committee until later that year.

“Block’s investigation was unauthorized by the full board of directors and based on stale evidence,” the arbitration panel said in its findings. Furthermore, the investigation breached the terms of the April 2004 agreement and “presented to the board of directors the selective, biased statements of O’Connell’s chief detractors and unfairly prejudiced the process to remove O’Connell,” the panel concluded.

Reached in his office, Block declined to comment.

A federal district court in Massachusetts upheld a jury verdict against Computer Associates finding that its compensation policy, which denied payment of sales commission to terminated employees on deals where payment was not received within 30 days of that employee’s termination, violated the covenant of good faith and fair dealing under Massachusetts law.

The compensation policy in question provided:

No Commission will be paid if the same shall not have been earned and otherwise become payable (as defined in the Sales plan) prior to termination with respect to a fully complete transaction. A “fully complete transaction” means that all of the conditions of a sale have occurred as described in this Sales Plan. The sole exception is that a Commission will be paid on an “incomplete” transaction if the only open condition is [Computer Associates’] receipt of payment and that payment is actually received by [Computer Associates] within 30 calendar days following the employee’s termination or resignation.

In upholding the jury verdict, the court noted that the CA policy allowed for payment of comission on sales where payment was received within 90 days for employees that were not terminated and that the sale in question was paid for within that 90 day window.

The opinion has a nice summary of various decisions which have used the covenant of good faith and fair dealing to override contractual termination clauses:

Massachusetts courts, as well as courts in other states, have applied the duty of good faith to override a range of express termination clauses. See Fortune v. National Cash Register Co., 373 Mass. 96, 101-02 (1977) (applying the covenant of good faith to override an express termination-at-will clause in an employment contract where termination was made in bad faith)5; see also K.M.C. Co. v. Irving Trust Co., 757 F.2d 752, 759-60 (6th Cir. 1985) (ruling that the obligation of good faith imposed a duty on the defendant to give a period of notice to K.M.C. before refusing to advance funds under the loan agreement, as was defendant’s right under the agreement); Rao v. Rao, 718 F.2d 219, 222-23 (7th Cir. 1983) (ruling that, under Illinois law, a restrictive covenant is not enforceable pursuant to the implied promise of good faith when an employee is terminated in ad faith and without good cause); Randolph v. New England Mut. Life Ins. Co., 526 F.2d 1383, 1386-87 (6th Cir. 1975) (concluding hat, under Ohio law, an insurance company could not terminate in ad faith a general agency contract with one of its agents); deTreville v. Outboard Marine Corp., 439 F.2d 1099, 1100 (4th ir. 1971) (applying South Carolina law to allow a claim for arbitrary termination of a franchise agreement where agreement
contained a clause allowing termination upon thirty-days’
notice); Shell Oil Co. v. Marinello, 307 A.2d 598, 600 (N.J. 1973) (holding that the implicit duty of fair dealing precluded arbitrary termination even though the franchise agreement provided for termination without cause, because of the franchisor’s “grossly disproportionate bargaining power”).

Bohne v. Computer Associates International, Inc. (MA. Dist. Ct., Aug. 22, 2006, Civil Action NO. 04-10068-WGY)

Link to full text of case [PDF]

In a case reported by Massachusetts Lawyers Weekly, a Massachusetts trial court held that, despite warnings in an employee manual that Internet activity would be monitored, an employee’s email communication to his lawyer via a Yahoo personal email account was “made in confidence” and, therefore, subject to attorney-client privilege. Key to the decision was the failure of the employee handbook to state that email “content” would be monitored.

The facts of the case involved email sent vial Yahoo’s web mail interface using a company lap top. After the employee terminated his employment and returned his lap top, the company, NERA, hired a computer forensics expert that was able to retrieve “screen shots” of the emails sent via the Yahoo web interface that were saved in a temporary file on the lap top hard drive.

The decision is interesting in that the judge held that the company’s employee manual did not put the employee on notice that such communication would be monitored. The Company’s (NERA) employee handbook as quoted in the decision provided:

Any e-mail or voice mail sent or Internet site visited using Company resources is a reflection on the Company. Misuse of these resources can result in damage to the Company’s reputation and even legal action. The personal use of e-mail, the Internet and telephones should be kept to a minimum for both productivity and financial reasons. All computer resources are the property of the Company. To the extent permitted by law and any applicable agreements, the Company may, from time to time and at its discretion, review any information sent or stored using these resources. Be aware that e-mails are not confidential and the Company may read them during routine checks.

. . .

Network administrators can read your [electronic] mail! Please use your Inbox as a temporary message store; delete your messages or (if you need to) archive them to the appropriate project directory after you have read them. Each Outlook installation has been set up to either delete or archive messages present in the Inbox and Sent Items folders.

. . .

NERA does permit the use of Internet resources (dedicated or via dial-up) for personal use provided such use results in personal time savings that can be (at least partially) applied toward work. ... Please note that all Internet access is logged by user and the logs are archived for at least 30 days. We do not make a habit of prying but any misuse of Internet resources can be easily traced.

. . .
A log may be kept of users’ network activities to monitor network usage. This may include logins, Internet sites visited, and electronic mail sent or received and telephonic and voice-mail usage.

At times, it may be necessary for computer or law enforcement personnel to monitor network traffic or desktop activities, including electronic mail.

Excerpts from NERA Employee Manual (emphasis added)

Despite these warnings in the employee handbook the Judge found that the employee was not on notice that copies of his personal email may be saved. The judge reasoned:

. . .

Based on the warnings furnished in the Manual, Evans could not reasonably expect to communicate in confidence with his private attorney if Evans e-mailed his attorney using his NERA e-mail address through the NERA Intranet, because the Manual plainly warned Evans that e-mails on the network could be read by NERA network administrators. The Manual, however, did not expressly declare that it would monitor the content of Internet communications. Rather, it simply declared that NERA would monitor the Internet sites visited. Most importantly, the Manual did not expressly declare, or even implicitly suggest, that NERA would monitor the content of e-mail communications made from an employee’s personal e-mail account via the Internet whenever those communications were viewed on a NERA-issued computer. Nor did NERA warn its employees that the content of such Internet e-mail communications is stored on the hard disk of a NERA-issued computer and therefore capable of being read by NERA.

NERA contends that any reasonable person would have known that the hard disk of a computer makes a “screen shot” of all it sees, which the computer then stores in a temporary file, including e-mails retrieved from a private password-protected e-mail account on the Internet. NERA further contends that any reasonable person would have known that these temporary files, although not readily accessible to the average user, may be located and retrieved by a forensic computer expert. This Court does not agree that any reasonable person would have known this information. Certainly, until this motion, this Court did not know of the routine storing of “screen shots” from private Internet e-mail accounts on a computer’s hard disk. Moreover, this Court notes that the American Bar Association issued its Formal Ethics Opinion 99-413 on March 10, 1999, entitled “Protecting the Confidentiality of Unencrypted E-Mail,” which outlined the various ways in which e-mails may potentially be seen by third parties, but nonetheless concluded that “lawyers have a reasonable expectation of privacy when communicating by e-mail maintained by an [on-line service provider],” such as Yahoo. The ABA Ethics Opinion did not even mention the possibility that such e-mails may be seen by anyone with access to the computer by examining the “screen shot” temporary file on the hard disk. Since a reasonable person in Evans’ position would not have recognized that e-mail communications with his private attorney made from a private Internet e-mail account could be read by NERA simply by examining the hard disk of his NERA laptop, he cannot reasonably have understood that these attorney-client communications could be “overheard” by NERA. Therefore, this Court finds that these attorney-client communications are protected by the attorney-client privilege.

. . .

[emphasis added]

National Economic Research Associates, Inc., et al. v. Evans, et al. (Lawyers Weekly No. 12-283-06) (10 pages) (Gants, J.) (Suffolk Superior Court) (Civil Action No. 04-2618-BLS2) (Aug. 2, 2006).

Massachusetts Lawyers Weekly reports on a case involving an employee who was diagnosed with a bipolar disorder. The employee had worked for Liberty Mutual Insurance Company in a sales role for 37 years (including 11 years after being diagnosed with the disorder) and was terminated for failure to generate sufficient business leads. During his employment, the employee asked for accommodations for his disability including that he be assigned specific accounts and adequate support staff.

After a two week trial, the jury found as reported in MLW:

The jury found that the plaintiff was, in fact, disabled, and that the requested accommodations for the plaintiff would not change the essential functions of the plaintiff’s position. The jury found that the accommodations requested by the plaintiff were reasonable and would have allowed the plaintiff to perform the essential functions of his position.

After a two-week trial, the jury returned a verdict of $1.35 million against the defendant. The damages awarded were $500,000 for emotional distress, $439,315 for lost wages and $416,664 for lost pension and retirement benefits.

Massachusetts Lawyers Weekly, page 9, August 21, 2006