New England Biz Law Update
After gaining momentum in recent years during the administration of former Gov. Deval L. Patrick, noncompete reform in Massachusetts appears to have been back-burnered.
With an advocate in the Corner Office — Patrick went as far as to support a California-style outright ban on noncompetition agreements — a compromise measure that would have placed limits on the duration, geographic reach and other features of noncompetes passed the state Senate last summer before being dropped from the economic development bill negotiated with the House.
This summer, none of the six noncompete-reform bills pending in the Legislature have made it to even a committee hearing. Supporters remain cautiously optimistic, but fear the prospects for reform have diminished under Gov. Charlie Baker.
The new governor has said little on the subject aside from comments at a pre-election debate in Springfield, when he stated his belief that the two sides — entrepreneurs who argue that noncompetes stifle the innovation economy, and big businesses that counter they are necessary to protect trade secrets and other interests — actually were not that far apart on issues such as what sort of work and workers should be subject to the agreements and how long they should last.
“This is sort of the last mile problem,” Baker said at the September debate, according to State House News Service. “This is an issue we should resolve. It’s creating a lot of friction across the technology community across Massachusetts.”
Since staking out that middle-of-the-road stance, however, many lawyers say Baker’s actions suggest he is more aligned with those who oppose reforming restrictive covenants.
In December, Baker appointed Woburn lawyer Andrew P. Botti, an outspoken opponent of noncompete reform, to his transition team subcommittee on jobs and the economy. And in April, Baker named Paul T. Dacier chairman of his Judicial Nominating Commission.
Dacier is executive vice president and general counsel of Hopkinton-based EMC Corp., which has developed a reputation for being one of Massachusetts’ most prolific and ardent enforcers of restrictive covenants by frequently filing lawsuits against former employees in the Superior Court’s Business Litigation Session, among other venues.
“I don’t think he chose Paul Dacier because he’s with EMC, and he’s opposed to noncompete reform, and he’s with a company that’s a serial filer of noncompete cases,” said John R. Bauer, a business litigator in at Boston. “But it still sends a message that the governor is not in favor of noncompete reform, isn’t likely to push noncompete reform in the Legislature, and is likely not to support noncompete reform if [lawmakers] ever got around to passing something, which isn’t likely.”
Dacier declined to comment, but Baker’s chief legal counsel, Lon F. Povich, said the decision to tap Dacier for JNC chairman “was in no way related to any position that EMC may or may not have taken in any case.”
Povich said Dacier was appointed to the post because of his commitment to the courts “and because the governor believes he will do an outstanding job in that role.”
One of Beacon Hill’s biggest proponents of noncompete reform, Rep. Lori A. Ehrlich, D-Marblehead, said Baker’s appointment of Dacier “is certainly a concern,” but it would be premature to assume the governor is wholly opposed to placing limits on the agreements.
Ehrlich attributed inaction on the pending bills she and others filed to squabbling between the state House and Senate over committee rules and compositions, not a lack of support from the Governor’s Office.
Given Baker’s business background, Ehrlich said she hopes the governor will be open to reform in response to the “chilling effect” of noncompetes across the workforce.
“I have learned not to presume where Gov. Baker stands on matters of policy as some of his positions don’t fall along expected party lines,” Ehrlich said. “I had a very brief conversation with him during the campaign and look forward to future discussions.”
Mark A. Whitney, a management-side attorney at Boston’s Morgan, Brown & Joy, cautioned against reading too much into Baker’s appointment of Dacier, but did note there has been far less “buzz” about noncompete reform this year than in the past.
“There’s not much intel on how Gov. Baker views [noncompetes],” Whitney said. “I guess it is relatively quiet compared to last year and the year before, which may be telling in and of itself. It usually gets hot right about now.”
According to Botti, noncompete reform was not even part of the conversation when Baker chose him for the transition team. He added that the governor simply has had more pressing issues to contend with, such as the state budget and the MBTA’s poor performance record over the past winter.
“Gov. Baker has demonstrated that he’s an open-minded individual and that he’s willing to listen to all sides and do what a good leader does, which is make the ultimate decision,” said Botti, a lawyer at McLane, Graf, Raulerson & Middleton. “But [noncompete reform] doesn’t impress me as being a front-burner issue at the moment.”
Both Bauer, a reform proponent, and Whitney, who generally supports noncompetes but would not be opposed to legislation targeting abuses, said fellow lawyers should not expect any changes to the law in the near future beyond incremental developments in caselaw.
But regardless of the prospects, Bauer said reform-minded attorneys and their clients should continue to push the issue in hopes of building broad-based support for reform. Then, perhaps, they can gain traction in the Legislature without vocal advocacy from the executive branch, the Birnbaum & Godkin lawyer said.
“The Chamber of Commerce is an active opponent of noncompete reform; there’s no balance on the other side,” Bauer said. “If you take the thousands of employees in Massachusetts bound by noncompete agreements, there’s no network binding those people together so they’re any sort of force in the Legislature. The employees who sign these noncompetes and have to live with them and are prevented from moving up and moving on — they’re not organized, and legislatures generally don’t respond to unorganized interests.”
