Roundup: 4th, 7th, 8th and 10th Circuits

Wage law not a fundamental public policy; Employers not liable for employees' off-the-clock work; Decision aids plaintiffs alleging trade secret misappropriation; Employee's "primary duty" is a question of fact, not law

4th Circuit: Wage law not a fundamental public policy

The 4th Circuit held in Kunda v. C.R. Bard, Inc., issued on Dec. 23, 2011, that Maryland employers can require employees to execute employment agreements with non-Maryland choice-of-law provisions, provided the other jurisdiction has a substantial relationship to the parties and its law is not contrary to fundamental Maryland public policy.

Bard, a New Jersey-based medical technology company, hired Hillary Kunda, a Maryland resident, in 2001. In 2003, Bard implemented an elective, equity-based long-term incentive program that offered the ability to defer bonus and commission awards on a pretax basis. The plan contained a New Jersey choice-of-law provision. Kunda participated in the program, but was terminated in 2008 before some of her compensation was fully vested.

Kunda brought suit against Bard, claiming she was entitled to the remaining vested funds under the Maryland Wage Payment and Collection Law (MWPCL), which she said was a fundamental public policy. The district court granted Bard’s motion to dismiss, stating that New Jersey Wage Payment Law applied, and even if MWPCL applied, Kunda still had no claim. The 4th Circuit affirmed the district court’s ruling, noting that 42 other states have enacted similar wage payment laws, undermining the notion that MWPCL is a fundamental public policy.

 

7th Circuit: Employers not liable for employees’ off-the-clock work

In Kellar v. Summit Seating Inc., the 7th Circuit issued a decision on Dec. 14, 2011, that may be a boon to employers faced with litigation seeking compensation for back pay under the Fair Labor Standards Act (FLSA).

usan Kellar, a sewing manager at vehicle seating manufacturer Summit, managed employees and was paid hourly. Kellar claimed that she would arrive 15 to 45 minutes early for her shift to review schedules and distribute fabric to subordinates’ workstations prior to clocking in, though she was never instructed by the company to do so. Upon resignation, Kellar sued Summit, claiming the company violated FLSA because she wasn’t paid overtime wages.

The district court granted summary judgment in favor of Summit. The 7th Circuit affirmed the decision, finding that Kellar’s preshift activities were “integral and indispensable” to her work, and not “preliminary,” thereby negating protection under the Portal-to-Portal Act portion of the FLSA. Additionally, the court concluded that Summit was not liable for the alleged preshift work because Kellar failed to prove Summit knew of the work or had reason to know of it.

 

8th Circuit: Decision aids plaintiffs alleging trade secret misappropriation

Using any amount of confidential information for commercial purposes could lead to trouble if that knowledge is obtained from a source without authority to disseminate it.

Consolidating two suits brought under the Uniform Trade Secrets Acts of Indiana and Missouri, the 8th Circuit’s Dec. 13, 2011, decision in AvidAir Helicopter Supply, Inc. v. Rolls-Royce Corp. centered on publicly available information about the repair and overhaul of Rolls-Royce helicopter engines. AvidAir sought a declaration, in part, that the information in question wasn’t protected by trade secret law. Rolls-Royce countered with a suit against AvidAir for trade secret violations under the Lanham Act.

In multiple summary judgment rulings, the district court held in favor of Rolls-Royce, finding that some of the information was a protected trade secret. AvidAir, which acquired the information partly from a third party and partly from public sources, was ordered to return the protected documents to Rolls-Royce. The 8th Circuit said in its opinion that as long as Rolls-Royce made a reasonable effort at maintaining secrecy, its misplaced trust in a third party that breached confidentiality didn’t negate those efforts.

 

10th Circuit: Employee’s “primary duty” is a question of fact, not law

On Jan. 4, the 10th Circuit clarified in Maestas v. Day & Zimmerman, LLC; SOC, LLC that the question of whether an employee is exempt from the Fair Labor Standards Act (FLSA) is a question of fact, and is inappropriate for summary judgment unless there was no genuine dispute of fact about the plaintiffs’ duties.

The plaintiffs, four private security workers hired to protect the Los Alamos National Laboratory, contended that their employer, collectively known as SOC, improperly classified them as exempt under the FLSA. The district court disagreed, granting summary judgment to SOC. The 10th Circuit reversed the decision, holding that summary judgment was inappropriate because the question of an employee’s “primary duty” is a question of fact, not of law.

Despite the setback for SOC, reversal of the district court’s grant of summary judgment to the employer may eventually aid companies opposing collective actions alleging misclassification because such cases cannot be certified.

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