Labor: Applying old rules to new technologies is becoming increasingly frequent

Two court decisions on departing employees show process of evolving rules

For several years we have noted that the legal system needs to catch up to the ongoing computer revolution, not necessarily to craft new rules, but to reach something resembling consensus on how the old rules apply to new technologies. While that process by definition is one that can never be completed, we do seem to be in a period of almost daily judicial decisions applying old rules to new technologies. Hopefully we are moving toward some established principles that will give litigants more predictability in discovery and other technology-related issues. Just as important, decisions give companies guidance in structuring their information management practices in the liability-minimizing way.

Two decisions within the last month involving relatively new technological versions of old legal issues demonstrate this still-evolving process, and each has a takeaway for corporate information management as well. Invidia LLC v. DiFonzo is a Massachusetts trial court decision involving a hair stylist’s (DiFonzo) employment agreement. The agreement contained a post-employment two-year restriction on soliciting her employer’s clients.

DiFonzo left employment with Invidia and, just four days later, her new employer announced on Facebook that she was now employed as a stylist with it. Not surprisingly, one of DiFonzo’s clients commented on the post that she was looking forward to an upcoming appointment with DiFonzo. At some unspecified point during this period, DiFonzo became Facebook friends with at least eight of the customers she had worked with at Invidia.

The court denied Invidia’s motion for a preliminary injunction finding in part that it had failed to show that DiFonzo had violated the nonsolicitation agreement. The court correctly noted that one can be Facebook friends without soliciting business, though from the facts provided to us, it seems likely that some teenagers would be puzzled by this decision and whether the judge fully “gets” social media. In any event, as is true with many judicial holdings in this highly fact-specific area of the law, litigants should not assume that this view of solicitation and social media will hold true in future cases.

It is common in restrictive covenant cases to struggle over when communication becomes prohibited solicitation. Companies with non-solicitation provisions are normally well advised to go to some lengths to craft such definitions. Here, it is advisable to revisit any such provisions and see if you are satisfied that they adequately anticipate social media contacts such as these. While it likely is not productive to unrealistically restrict social media activity, it is likely there are appropriate restrictions that would protect the company in various online scenarios.

The other case is AllianceBernstein L.P. v. Atha, where a New York appellate court reversed a trial court’s discovery decision relating to production of his iPhone in discovery. Again this involves a former employer suing a departed employee (Atha), this time alleging that Atha took proprietary client contact information on his iPhone when he departed. (And again, the “low tech” version of the issue—what client contact information is protectable under the trade secrets and other laws—is a long-standing one.)

The lower court found that the discovery request for the production of Atha’s iPhone was overbroad and “tantamount to ordering the production of his computer.” (And again one wonders about the reaction of most teenagers to that statement – “Well, your honor, it is his computer,” and a more powerful computer than most computers that sat on our desktops not 10 years ago.) Perhaps more in line with what we would expect, the appellate court ordered an in camera review of the iPhone, assisted by a record of the device’s contents.

This decision underscores the omnipresence of handheld devices in the conduct of business, and the critical importance for companies to be actively managing this information just as they would the easily accessible information on the company’s primary computer system. Perhaps in no area are fewer companies where they should be from a best practices standpoint than they are with respect to employee-owned mobile devices. Every reader should ask, does my company have a consensus on how company information on mobile devices will be handled, and do we have a written that reflects that.

It is almost a given that this coming week will bring more court decisions addressing the application of old rules to new technologies, and companies need to remain vigilant as both the technology and the legal consensus evolves. This process is particularly challenging because of the pace of that revolution, for two reasons. One, the target is continuously moving forward at a breakneck pace—6 months from now there will be a new technology or social media platform or something that raises issues we had not even thought of.

Two, a “generation” of technology users is just a few years in duration because the technology people “grow up” with changes constantly, so we lack a shared base of experience on which to build those rules. Decisions by judges of a certain age group may not always be in sync with how younger generations experience technology. It has always been true that rule-makers tend to be at least middle aged, but rarely if ever is the target of the rule-making moving as fast as technology does today.

Stay tuned.

Contributing Author

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William Nolan

William A. Nolan serves as the Managing Partner of Barnes & Thornburg LLP’s Columbus, Ohio, office. He is a member of the firm’s Labor and...

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