Justia Contracts Opinion Summaries

This case involves the State's "working retiree program," and the propriety of its withholding retirement contributions from eligible members who returned to work with the state prior to July, 2005. Before that time, the program allowed employees to retire, then after a break, be re-hired and receive retirement benefits and a salary of up to $50,000 per year without having to pay into the pension plan. The State was ordered to refund any contributions made since July, 2005 by program members. In 2005, the State Retirement System Preservation and Investment Reform Act amended the program to require retired members pay the employee contribution as if they were active members but without accruing additional service credit. The State appealed the circuit court's order to refund the contributions. The retirees challenged the change in the program, arguing that it was unlawful for the State to change the terms of the working retiree program after the retirees "irreversibly retired" with the understanding that contributions to the pension plan would not be required. Upon careful consideration of the arguments and legal authority, the Supreme Court reversed the circuit court's holding with respect to the State's return of contributions since 2005. The Court found that the Legislature enabled the State to take the contributions when it amended the program by Act in 2005. The Court dismissed the Retirees' challenge to the State Retirement System Preservation and Investment Reform Act, finding no merit in their argument.

Sisters of Charity Health System, Inc. (SOCHS) sued its former employees, Douglas Farrago, MD, Raymond Stone, DO and Carolyn Kase, DO, to enforce restrictive covenants contained in contractual agreements between the doctors and SOCHS. The Superior Court entered a judgment in favor of SOCHS and ordered each doctor to pay liquidated damages pursuant to clauses in their contracts. On appeal, the doctors contended that the restrictive covenants and liquidated damages clauses were unenforceable. The Supreme Court's focus on appeal was whether the covenants reasonably sought to protect a legitimate business of SOCHS. The Court concluded that the covenants did protect legitimate business interests, and the contracts contained enforceable liquidated damages provisions. The Court affirmed the decision of the Superior Court in favor of SOCHS.

In June 2009, defendant filed an arbitration demand against plaintiff alleging claims for wrongful termination and breach of contract based on plaintiff's failure to pay a performance bonus. Defendant subsequently filed a new demand for arbitration in October 2010, which included his original claims plus claims of fraud and breach of contract, after the arbitrator denied his motion to amend the original arbitration demand when he discovered evidence suggesting that plaintiff had padded estimated revenues for defendant's companies by $17 million. Plaintiff argued on appeal that the district court erred by not granting its motion for a preliminary injunction and temporary restraining order; that defendant's withdrawal from the first arbitration waived his right to a second arbitration; and that the first arbitration's October Order, denying defendant leave to amend, was an enforceable arbitration award. The court held that the Federal Arbitration Act, 9 U.S.C. 16(b)(4), precluded the court's review of the district court's order refusing to enjoin the arbitration. The court also held that a final decision with respect to an arbitration required an official dismissal of all claims and thus, where the district court stayed proceedings in lieu of dismissal, the decision was not final. The court further concluded that an arbitration award was a final adjudication of a claim on the merits and a procedural ruling that denied leave to amend was not an award since the decision had no effect on the merits of the proposed claims. Accordingly, the court dismissed the appeal for lack of jurisdiction.

In the first lawsuit, retirees, funded by the union, obtained a preliminary injunction preventing plaintiff from terminating their healthcare benefits. The case is still pending. In the second lawsuit, the plaintiff claims that the union's participation in the first lawsuit violated a collective bargaining agreement (CBA) and that the union, during negotiation of the CBA, committed breach of an implied warranty of authority, negligent misrepresentation, and intentional misrepresentation. The district court dismissed the second suit, holding that the union did not breach the CBA and that federal law preempted the state law claims. The Sixth Circuit affirmed that the union did not breach the CBA, which did not include a covenant not to sue, as claimed by the plaintiff. The court reversed with respect to preemption of the tort claims, which are "analytically distinct, but of a piece for purposes of" jurisdiction under 29 U.S.C. 185(a).

American Media Services, LLC (AMS) appealed an arbitration award that was decided in favor of former employee, Respondent Mark Steinmetz. Steinmetz claimed AMS breached his employment agreement, and the parties agreed to settle the dispute through arbitration. The arbitrator found in favor of Steinmetz. AMS filed a motion to have the award reconsidered by the circuit court, but the court entered judgment in accordance with the arbitrator's findings. The Supreme Court found in submitting its appeal, AMS did not appeal the order of the circuit court, it appealed the order of the arbitrator. Accordingly, the Court did not have jurisdiction over AMS' claim and dismissed it.

American Media Services, LLC (AMS) appealed an arbitration award that was decided in favor of former employee, Respondent Mark Steinmetz. Steinmetz claimed AMS breached his employment agreement, and the parties agreed to settle the dispute through arbitration. The arbitrator found in favor of Steinmetz. AMS filed a motion to have the award reconsidered by the circuit court, but the court entered judgment in accordance with the arbitrator's findings. The Supreme Court found in submitting its appeal, AMS did not appeal the order of the circuit court, it appealed the order of the arbitrator. Accordingly, the Court did not have jurisdiction over AMS' claim and dismissed it.

Petitioner filed a breach of contract claim against its former employee claiming that the employee violated the terms of her employment agreement by breaching the duty of loyalty and by breaching a non-solicitation clause which was included in the contract. The employee filed a counterclaim alleging that petitioner withheld her bonus in violation of the Maryland Wage Payment and Collection Law, Md. Code Ann., Labor and Employment section 3-501. At issue was whether an employee who breached her duty of loyalty could seek certain of the provisions of the contract which she breached. Also at issue was whether a party could recover attorneys' fees pursuant to a contract provision that provided reimbursement of fees incurred when a third party retained and paid counsel and the party did not pay attorneys' fees, nor had any obligations to pay attorneys' fees. The court held that the employee's breach of duty of loyalty did not result in forfeiture of her rights under the fee shifting provision of the non-solicitation clause where the clause presented divisible rights and obligations from the remainder of the contract. The court also held that the employee was entitled to attorneys' fees under the fee shifting provision where she prevailed under the terms of the contract and the breach did not result in the forfeiture of her rights.

The Court affirmed the lower courtâs decision dismissing Plaintiff-Appellant David Gerasâ contract claim for unpaid commissions and severance against his former employer International Business Machines (IBM). IBM canceled its sales incentive plan under which Geras maintained he accrued sales commissions worth over $100,000. The Court held that under Colorado law, the planâs incentive letter contained an effective disclaimer, and did not manifest an intent to be bound by the terms of its plan.