Legal Briefings

AN UNFAIR COMPETITION CLAIM
DTC Energy Group Inc. is a Colorado staffing company. Adam Hirschfield was DTC’s business development manager and signed an employment agreement with a non-solicitation clause. DTC and another staffing entity, Ally Consulting LLC, began working together on a limited basis regarding staffing projects. DTC discovered that Hirschfield was sending DTC’s business and contacts to Ally. DTC confronted Hirschfield about this behavior but allowed him to continue working for a few more months until he resigned and began working for Ally. As an employee for Ally, Hirschfield continued to solicit DTC’s business and customers. Months later, DTC filed a lawsuit against Hirschfield and sought a preliminary injunction to prevent him from continuing to solicit DTC’s customers. DTC alleged that Hirschfield breached his employment agreement, stole trade secrets and engaged in unfair competition. The U.S. District Court for the District of Colorado denied DTC’s motion for a preliminary injunction, and the U.S. Court of Appeals for the 10th Circuit affirmed this decision. The 10th Circuit held that DTC could not show how it was being irreparably harmed by Hirschfield’s conduct so as to require a preliminary order preventing Hirschfield from soliciting DTC customers. Rather, Hirschfield had already diverted 12 contracts from DTC to Ally. The court held that this restrictive covenant had lapsed and there was no further basis to enjoin Hirschfield. DTC Energy Group Inc. v. Hirschfield, No. 18-1113, 2018 WL 6816903 (10th Cir. Dec. 28, 2018).

IMPACT: It’s important that companies plan in advance for unfair competition scenarios.

A LIMITED DEFINITION OF CONCERTED ACTIVITY
Alstate Maintenance LLC staffs Kennedy International Airport with tipped baggage handlers. Two managers from Lufthansa asked a group of Alstate skycaps to assist a VIP soccer team with their baggage. A skycap stated to his Alstate manager, in front of others, “We did a similar job a year prior and we didn’t receive a tip for it.” The skycaps initially refused to help with the baggage but ended up pitching in. Alstate terminated the skycap. An unfair labor practice was filed alleging Alstate terminated the skycap for engaging in concerted activity. The National Labor Relations Act provides employees the right to engage in “concerted activities” for purposes of their “mutual aid or protection.” Protection for engaging in concerted activity extends to all employees. In a 3-1 vote, the NLRB held the termination did not violate the NLRA and adopted a more limited definition of “concerted activity.” In finding the skycap’s comment was not concerted activity, the NLRB held concerted activity must involve “bring[ing] a truly group complaint regarding a workplace issue to management’s attention. … [I]ndividual griping does not qualify as concerted activity solely because it is carried out in the presence of other employees and a supervisor and includes the use of the first-person plural pronoun.” Alstate Maintenance LLC, 367 NLRB No. 68 (2019).

IMPACT: All social media and other communication-related employment policies should recognize no adverse employment actions will be taken against employees for engaging in concerted activity.

Rachel L. Schaller and Daniel Saeedi are attorneys at Taft Stettinius & Hollister LLP. To comment, email editors@workforce.com.