New England Biz Law Update
The counterclaim of an employee sued by his former employer for violating a confidentiality agreement was recently dismissed under the Massachusetts anti-SLAPP statute – even where he claimed his former employer’s lawsuit violated an unfair-competition law.
The employee, Wiliam Shields, argued the anti-SLAPP protections didn’t apply to his unfair competition counterclaim because the confidentiality agreement was invalid, and the employer, Carl Zeiss Meditec, Inc., had no basis for suing him.
The anti-SLAPP law protects against lawsuits filed solely to suppress free speech rights, such as filing a lawsuit, which is considered a constitutionally protected “petitioning” activity.
Superior Court Judge Judith Fabricant rejected Shields’ argument and dismissed his counterclaim. Fabricant also awarded the employer its counsel fees and costs related to defending against the counterclaim.
“[The employer] has met its threshold burden of showing that [the employee’s] counterclaim is based solely on petitioning activity, and [the employee] has not met his burden of showing that [the employer’s] petitioning activity is devoid of a reasonable basis in fact or law,” Fabricant wrote in her 11-page decision in Carl Zeiss Meditec, Inc. v. Shields (Docket No. 07-2453).
According to the employer’s attorney, Gregg A. Rubenstein of Boston, Shields filed the counterclaim solely in response to his client’s good-faith effort to enforce the employment contract.
“If a company couldn’t pursue a contract claim because the mere doing so was unfair and would subject them to liability on a counterclaim, then you’d have a lot of problems because a lot of companies would feel stifled in their right to pursue claims in court,” said Rubenstein.
While Superior Court Judge Ralph D. Gants had denied an employer’s anti-SLAPP motion to dismiss in a similar 2006 case, Brooks Automation Inc. v. Blueshift Technologies, Inc., Rubenstein said his client’s situation was different in that there was factual support for the underlying suit.
“Unless you’re pursuing the claim with no basis for doing so, as the company was in Blueshift, anti-SLAPP is going to apply,” he said. “The mere fact that somebody has been sued is not an independent wrong, and if you assert as much in a counterclaim, then you’re going to be subject to paying the other side’s attorneys’ fees.”
Rubenstein said the ruling is a red flag for defendants: “They can’t just throw in all these counterclaims and think there are no potential repercussions from doing that.”
Citing the ongoing nature of the case, Michael R. Heyison of Boston, who represented Shields, declined comment.
Company interests
The employer, Carl Zeiss Meditec, Inc., is a medical technology supply corporation based in California. In 2004, it hired the defendant, William Shields, to work as its European sales director. When he was not traveling, he worked out of his home in Massachusetts.
Shields signed an agreement preventing him from engaging in any activity during his tenure that was detrimental to the employer’s interest. If he were to resign, the agreement also barred him from interfering with the company’s business for two years.
While the agreement explicitly said he was not restricted from working for a competitor after the termination of his employment, he was required to return any confidential information upon leaving.
Carl Zeiss Meditec alleged that, through his position as sales director, Shields had gained extensive knowledge of confidential information and had developed substantial contact with its customers.
In April 2007, Shields resigned and began working for a competitor. He continued to work from his home in Massachusetts.
Carl Zeiss Meditec alleged in its complain that prior to his departure Shields had transmitted confidential information to his new employer and failed to return other data.
Shields filed a counterclaim arguing the company’s lawsuit violated California’s unfair competition statute.
The company asked for a temporary restraining order preventing Shields from working for his new employer and using the confidential information.
The judge didn’t bar Shields from continuing his new employment, but prohibited him from taking advantage of the confidential information.
‘Arguable basis’
Fabricant said Shields’ counterclaim pertained exclusively to Carl Zeiss Meditec’s petitioning activity in filing the lawsuit. The only way he could prevail, the judge said, would be by showing the company’s suit had no reasonable factual support or arguable basis in law, as mandated by the Massachusetts anti-SLAPP statute.
She said the earlier preliminary injunction entered against him in the case prevented him from doing so. The injunction, she wrote, established that at least some of the employer’s claims were legitimate.
She further disputed the employee’s argument that California law should govern the case simply because of that state’s status as the employer’s principal place of business.
“Nothing before the court indicates that [the employee] works … in California, or that he would do so but for his contract with [his former employer],” she said. “The California statute thus has no apparent bearing on the factual or legal basis for [the] claims against [the employee].”
