Justia Contracts Opinion Summaries

Jani-King, the world’s largest commercial cleaning franchisor, classifies its franchisees as independent contractors. Its cleaning contracts are between Jani-King and the customer; the franchisee is not a party, but may elect to provide or not provide services under a contract. Jani-King exercises a significant amount of control over how franchisees operate and controls billing and accounting. Two Jani-King franchisees assert that they are misclassified and should be treated as employees. On behalf of a class of Jani-King franchisees in the Philadelphia area (approximately 300 franchisees), they sought unpaid wages under the Pennsylvania Wage Payment and Collection Law (WPCL), 43 Pa. Stat. 260.1–260.12. The Third Circuit affirmed certification of the class under Federal Rule of Civil Procedure 23(f). The misclassification claim can be made on a class-wide basis through common evidence, primarily the franchise agreement and manuals. Under Pennsylvania law, no special treatment is accorded to the franchise relationship. A franchisee may be an employee or an independent contractor depending on the nature of the franchise system controls. View "Williams v. Jani-King of Philadelphia Inc" on Justia Law

The Michigan office of Alix, an international company, administers payroll and benefits for U.S. employees and is directly involved in U.S. hiring. In 2013, Alix hired Brewington, a Texas resident, for its Dallas Corporate Services team. The employment agreement provides that it “will be construed and interpreted in accordance with the laws of the State of Michigan” and states, “any dispute arising out of or in connection with any aspect of this Agreement and/or any termination of employment . . ., shall be exclusively subject to binding arbitration under the . . . American Arbitration Association . . . decision of the arbitrator shall be final and binding as to both parties.” In 2014, Brewington was terminated. He filed a demand for arbitration, asserting claims under Title VII, 42 U.S.C. 2000e, on behalf of himself and a purported nationwide class of current, former, and potential Alix employees. The Michigan district court ruled that Brewington was precluded from pursuing arbitration claims on behalf of any purported class. The Sixth Circuit affirmed that court’s refusal to dismiss, finding that Brewington had sufficient contacts with Michigan to establish personal jurisdiction, and upheld summary judgment in favor of Alix. An agreement must expressly include the possibility of classwide arbitration to indicate that the parties agreed to it. This clause is silent on the issue and is limited to claims concerning “this Agreement,” as opposed to other agreements. It refers to “both parties.” View "AlixPartners, LLP v. Brewington" on Justia Law

Plaintiffs are trust funds and employee benefit plans for construction industry employees. MRS constructs commercial buildings. In 1997, MRS signed “me-too agreements” binding it to collective bargaining agreements (CBAs) bestowing rights on Plaintiffs. Under the agreement, MRS agreed to be bound by the 1997-2001 CBA in force between a multiemployer association and the union. According to Plaintiffs, MRS also agreed to be bound by later CBAs because the 1997 agreement contains an “evergreen clause” and MRS never gave the notice required to terminate the clause. MRS conceded that it never gave notice, but denied that the letter continuously granted bargaining rights. Under each CBA, employers had to make specified contributions to various Plaintiff funds and permit audits of records relevant to those obligations. Plaintiffs sent MRS requests for audits, believing that MRS had failed to make contributions required by the 2012-2015 CBA. When MRS did not comply, Plaintiffs sought post-audit relief under 29 U.S.C. 1145 for unpaid ERISA contributions and injunctive relief compelling MRS to comply with the 2012-2015 and subsequent CBAs. The Third Circuit reversed dismissal, rejecting an argument that all me-too agreements must satisfy two criteria in order to bind non-signatories to future CBAs. Absent that requirement, the plausibility of the complaint should be assessed under contract law principles and states a plausible claim for relief. View "Carpenters Health & Welfare Fund v. Mgmt. Res. Sys., Inc." on Justia Law

Stevens worked for Baker from 1989 until 1996. When his employment ended, Stevens signed a contract in which he promised to maintain the confidentiality of Baker’s trade secrets. In 1999, Stevens sued, alleging failure to fully pay the compensation due him during his employment. The parties eventually settled; Baker paid Stevens $10,000. Around that time, Stevens formed S&S Chemical to produce polyethylene products. Baker suspected that S&S was improperly using Baker’s EP Processes and sent Stevens a letter in 2002 reminding Stevens of his Termination Agreement. Stevens responded that he had independently developed the processes used to manufacture S&S’s chemicals. Baker later confirmed that S&S was not then using Baker’s confidential information. Baker again became suspicious and, in 2014, sued Stevens. The Sixth Circuit affirmed judgment in favor of Stevens. Petrolite unquestionably knew of and approved each step that gave rise to the settlement contract at issue, the Release Provision of which unambiguously released Stevens from the obligations of the Termination Agreement. View "Baker Hughes Inc. v. S&S Chemical, LLC" on Justia Law

Plaintiffs Morris and McDaniel filed suit against Ernst & Young, alleging that the company misclassified Morris and similarly situated employees and denied overtime wages under the Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq., and California laws. Ernst & Young subsequently moved to compel arbitration under the agreements signed by Morris and McDaniel. The district court ordered arbitration and dismissed the case. Morris and McDaniel argue that their employment agreements, where they signed a "concerted action waiver" with the company, violate federal labor laws and cannot be enforced. Plaintiffs claim that the “separate proceedings” clause in the agreement contravenes three federal statutes: the National Labor Relations Act (NLRA), 29 U.S.C. 151 et. seq., the Norris LaGuardia Act, 29 U.S.C. 101 et seq., and the FLSA. The court agreed with the Board's interpretation of section 7 and section 8 of the NLRA that an employer violates the NLRA when it requires employees covered by the Act, as a condition of their employment, to sign an agreement that precludes them from filing joint, class, or collective claims addressing their wages, hours, or other working conditions against the employer in any forum, arbitral or judicial. In this case, the terms of the concerted action waiver are unenforceable. The “separate proceedings” clause prevents concerted activity by employees in arbitration proceedings, and the requirement that employees only use arbitration prevents the initiation of concerted legal action anywhere else. The court also concluded that the Federal Arbitration Act, 9 U.S.C. 1 et seq., does not dictate a contrary result. Accordingly, the court vacated and remanded for the district court to determine whether the “separate proceedings” clause was severable from the contract. View "Morris v. Ernst & Young, LLP" on Justia Law

When David Goldan began working as an independent contractor insurance agent for Farmers Insurance Exchange, Farmers and Goldan entered into an Agency Appointment Agreement defining the parties’ rights and obligations. After Farmers terminated Goldan, Farmers sued Goldan alleging that Goldan breached his contractual duties and fiduciary responsibilities under the Agreement by soliciting and servicing the insurance business of policyholders within a year of his termination. Goldan counterclaimed for breach of contract, alleging that Farmers terminated him without cause. The jury ruled in favor of Goldan on all issues. The Supreme Court affirmed, holding that the district court did not err (1) by denying Farmers’ motion for judgment as a matter of law on the question of damages; (2) in denying Farmers’ motion for sanctions based on Goldan’s alleged discovery violations; and (3) in concluding that damages should not be limited to a three-month notice period allowed in the contract for terminations without cause. View "Farmers Ins. Exchange v. Goldan" on Justia Law

After hiring Plaintiff, Defendant-employer amended its sales commission plan. At dispute in this case was a revised commission provision, which provided that Plaintiff’s commissions would not be paid unless Defendant had invoiced commissionable amount to the client prior to Plaintiff’s termination. After Plaintiff was terminated, he filed a wage statute claim alleging that the commission provision was contrary to public policy and a violation of Conn. Gen. Stat. 31-72. Plaintiff’s remaining two claims were stricken upon Defendant’s motion. After a trial, the court granted judgment in favor of Plaintiff, holding that the commission provision at issue was contrary to public policy. Both parties appealed. The Supreme Court affirmed in part and reversed in part, holding that the trial court (1) improperly determined that the commission provision violated public policy and constituted a violation of section 31-72; (2) erred in striking Plaintiff’s claim alleging breach of the implied covenant of good faith and fair dealing; and (3) did not err in striking Plaintiff’s claim alleging wrongful discharge. Remanded. View "Geysen v. Securitas Security Servs. USA, Inc." on Justia Law

Amy Tuschen worked for RLM for six years and then joined a competitor, eScience. RLM filed suit against eScience and Tuschen, alleging principally that Tuschen breached a covenant not to compete and unlawfully took confidential information from RLM and shared it with eScience. The district court granted summary judgment to defendants. The court concluded that the covenant not to compete was not enforceable because it was overbroad, and RLM failed to present sufficient evidence that Tuschen took or shared RLM’s confidential information. The court rejected RLM's remaining claims and affirmed the judgment. View "RLM Communications v. Tuschen" on Justia Law

Multi-employer funds established by a collective bargaining agreement (CBA) between the Sheet Metal and Air Conditioning Contractor National Association and the Sheet Metal Worker’s Union sought confirmation of arbitration awards granted against five employers. None of the employers had participated in the arbitration, which concerned contributions to the funds. The district court declined to confirm the award, concluding that there was an open question as to whether the employers were party to the CBA, and, therefore, bound to its arbitration procedures. After initially ruling that state law applied to the question of whether the employers were bound to arbitrate under the CBA, the court certified a question for appeal pursuant to 28 U.S.C. 1292(b): whether state or federal law will apply at trial to the question of whether the employers “are bound/signatory to” the CBA? The Sixth Circuit reversed. While state contract law may provide helpful guideposts to federal courts, it is well-established that in the field of labor relations, the technical rules of contract law do not determine the existence of a CBA. The law to be applied to the question of whether a party has assented to the terms of a CBA, including an arbitration provision, is ultimately federal. View "Sheet Metal Employers Indus. Promotion Fund v. Absolut Balancing Co., Inc." on Justia Law

Plaintiff filed a negligence action against Nucor after sustaining injuries while working at Nucor's steel mill. The district court granted summary judgment to Nucor, finding that the third-party waiver's (TPW) language and the circumstances of its execution met the standard for enforcement of exculpatory contracts under Arkansas law and that the agreement was not unconscionable. The court agreed with the district court that the TPW was enforceable where the parties stipulated that plaintiff had the opportunity to read the TPW, that he did not ask the trainer any questions concerning the meaning of the TPW, and that he had the ability to read and understand the contract. The court also concluded that the contract provision at issue is not unconscionable where there is no evidence rebutting Nucor's affidavit showing the availability of other work in the region at that time, plaintiff had the opportunity to read and understand the TPW, and there is no evidence of fraud, duress, misrepresentation, or any other inequitable conduct on the part of Vesuvius or Nucor. Accordingly, the court affirmed the judgment. View "Stewart, Jr. v. Nucor Corp." on Justia Law