Posts tagged with "lawsuit"

Excessive Geographical Limitation in Connecticut Non-Compete Agreement Found Unenforceable

Timenterial, Inc. v. Dagata, 29 Conn. Supp. 180
Case Background

Timenterial was a company that engaged in the sale and rental of mobile units and had previously employed Mr. James Dagata.  The employment contract contained a non-compete clause wherein Mr. Dagata agreed not to “engage in any business venture having to do with the sale or rental of mobile homes or mobile offices in a fifty miles radius from any existing Timenterial, Inc. sales lot” for one year following the termination of his employment.

Mr. Dagata terminated his employment on June 1, 1970, and Timenterial claimed that he had been active in business ventures involving mobile homes beginning June 12, 1970, at an office located a mere one-quarter mile from Timenterial’s Plainville, CT office.  Timenterial commenced a suit for violation of the non-compete agreement and sought to restrain Mr. Dagata from further mobile home business ventures in accordance with the agreement.

The Court’s Decision

The court found in favor of Mr. Dagata and held that the non-compete agreement was unenforceable because the geographical restriction in the agreement was unreasonable and excessive.  At the time of legal proceedings, Timenterial had seven facilities in Connecticut, four in Massachusetts, two in Vermont, and one in New Hampshire.  The court applied the fifty-mile radius as stipulated in the agreement and held that this territorial prohibition was unreasonable.

The application of the agreement would mean that Mr. Dagata could not be involved in the mobile homes business in all or substantial parts of Connecticut, New York, Massachusetts, Vermont, New Hampshire, and Rhode Island.  This placed excessive restrictions on Mr. Dagata and severely limited the opportunity for him to practice his occupation.  This excessive and burdensome characteristic of the non-compete rendered the agreement unenforceable and the court concluded that Mr. Dagata’s actions did not constitute a breach of the restrictive covenant.

 

If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

Court Denies Injunction Against Former IBM Executive

By:  Joseph Maya, Esq.

Early in the morning of January 19, 2011, Mr. Visentin notified IBM that he was leaving the company to work for a major competitor- Hewlett-Packard.  Just one day later, he found himself the subject of a lawsuit.  On January 20, 2011, in an effort to enforce the parties’ noncompetition agreement, IBM filed suit against Mr. Visentin, a former executive, in the United States District Court for the Southern District of New York, claiming breach of contract and misappropriation of trade secrets.

Case Background

On January 24, 2011, the Court issued a temporary restraining order, and scheduled the case for a preliminary injunction hearing.  Within five days of providing IBM with notice of his departure, Mr. Visentin was effectively without a job, precluded- at least temporarily- from engaging in his newly secured position.  This case demonstrates not only the force, speed and agility of a large corporation’s legal team, but perhaps more importantly, illustrates the effectiveness of a quickly orchestrated and well-executed legal defense.

Prior to his resignation, Mr. Visentin worked for IBM in various capacities for twenty-six years.  In 2006, he became a Global Vice President in the company’s Integrated Technology Services Group (ITS).  Then, in September, 2007, he became General Manager of the ITS business.  Responsible for providing its clients with various technology services, including services to improve data storage and recovery capabilities, protect networks from viruses, and implement data security systems, this segment generates approximately five thousand to nine thousand deals per quarter, and total revenue of $2.5 billion annually.

In December, 2008, Mr. Visentin was appointed to IBM’s Integration and Value Team, a leadership group that develops IBM’s corporate strategy.  Although there were technical aspects of Mr. Visentin’s various positions, after hearing four days of testimony, the Court found that he was a business manager, not a technical expert.

Non-Compete Agreements

As part of his employment with IBM, Mr. Visentin signed two noncompetition agreements, the first on July 16, 2008 and the second on July 29, 2009.  The July 29th agreement essentially provided that during his employment with IBM, and for 12 months thereafter, he would not directly or indirectly engage in or associate with any competitors of the company.  Mr. Visentin also agreed to a restrictive covenant precluding him from soliciting IBM clients for a period of one year, and IBM employees for a period of two years.

IBM’s first argument was that if Mr. Visentin were allowed to work for HP, IBM would be irreparably harmed because Mr. Visentin’s new position posed the risk that he would inevitably disclose confidential IBM information.  IBM argued that Mr. Visentin possessed a plethora of confidential information including strategic business and marketing plans, “strategic initiative,” new service offerings, acquisition plans, the operational finances of the ITS business, IBM’s competitive business and pricing strategies, the identity of new client targets, the identify of troubled clients, and IBM’s competitive strategies to attack HP.

Court Denies Injunction

In denying IBM’s application for an injunction, the Court first noted that a preliminary injunction is “an extraordinary and drastic remedy which should not be routinely granted.”  Med. Soc’y of State of N.Y. v. Toia, 560 F.2d 535, 538 (2nd Cir. 1977).  Indeed, to obtain a preliminary injunction, the moving party must demonstrate, first, that it will be irreparably harmed if an injunction is not granted, and, second, either a likelihood of success on the merits or sufficiently serious questions going to the merits to make them a fair ground for litigation, as well as a balance of the hardships tipping decidedly in its favor.  Lusk v. Vill. Of Cold Spring, 475 F.3d 480, 485 (2nd Cir. 2007).

To show that it will be irreparably harmed, a movant bears the burden of demonstrating that absent an injunction, it will suffer an injury that is neither remote nor speculative, but rather actual and imminent, and one that cannot be redressed through a monetary award. Payment Alliance Int’l, Inc. v. Ferreira, 530 F. Supp. 2d 477, 480 (S.D.N.Y. 2007).

Next, the Court explained that in New York, properly scoped noncompetition agreements are enforceable to protect an employer’s legitimate interests so long as they pose no undue hardship on the employee and do not militate against public policy.  BDO Seidman v. Hirshber, 712 N.E. 2d 1220, 1223 (N.Y. 1999).

The Court further explained that trade secrets and confidential information are considered legitimate interests; however, only that confidential information or those trade secrets that the employee misappropriates or will inevitably disclose are protectable.  Reed, Roberts Assocs., Inc. v. Strauman, 353 N.E. 2d 590, 593 (N.Y. 1976).

Court’s Ruling

In ruling in Mr. Visentin’s favor, the Court noted that his primary job at IBM was to be a general manager, explaining, “[a]lthough trade secrets may have lurked somewhere on the periphery, the real thrust of his position was to manage his teams to make them as efficient as possible.”  The Court relied on Mr. Visentin’s testimony that he had never taken a computer science course and considered himself a generalist.  Mr. Visentin testified, “I am not technical, I don’t know the details of offerings, I’m more of a general manager and I run a business.”

The Court also relied on the testimony of Mr. Visentin’s new manager at HP, who confirmed that Mr. Visentin’s generalist qualities were the driving factor behind his hiring.  Mr. Visentin’s future manager testified that he hired Mr. Visentin because, “he had good general IT services knowledge [and] broad experience,” and that Mr. Visentin struck him, “as a process-oriented thinker, a guy who could sort of connect the dots, if you will, of the overall responsibilities of the job.”  He also testified that Mr. Visentin’s job would not include involvement in technical services, but rather would be to “manage people.”

Court Does Not Find

Although IBM identified numerous types of information potentially in Mr. Visentin’s possession which it argued should be afforded protection, the court noted that much of the information is either applicable to all large corporations, in the public domain, or outdated, and, thus, does not constitute “trade secrets.”

The court also explained that simply showing Mr. Visentin had access to some confidential information does not sufficiently demonstrate irreparable harm.  IBM failed to provide specific examples of confidential or trade secret information that could actually be used to its detriment if Mr. Visentin were allowed to assume his new position at HP.  The Court further held that IBM failed to demonstrate Mr. Visentin’s position at HP would require him to disclose any confidential IBM information he might remember.

Contact Us

Attorney Joseph Maya is a Managing Partner of Maya Murphy, P.C. Litigation Department. He can be reached by telephone in the Firm’s Westport office at (203) 221-3100 or by e-mail at JMaya@Mayalaw.com.

Non-Compete Agreements (Restrictive Covenants) for Practicing Physicians in New York and Connecticut: Just How Enforceable Are They?

A restrictive covenant (often referred to as a non-compete clause or a covenant not to compete) is a clause contained in an employment contract through which the employee agrees not to pursue a similar profession or trade, placing them in competition with the employer, after the employment relationship is terminated.  This clause or covenant is often put in place to prevent a former employee from using information he or she obtained through the course of their employment to gain a competitive advantage over their former employer.  

If you are currently employed as a physician and your employment agreement contains a provision similar to the type of covenant described above, you probably want to understand how a Court will determine the validity of such a clause in order to understand how such a clause will impact your future as a physician after the termination of your current employment contract, joinder and/or partnership agreement.

Below is a summary on the way Courts are handling the non-compete clauses included in the employment contracts of physicians employed in Connecticut and New York.  This review and analysis consists of two separate, but related parts.  First, a Court must determine whether the non-compete clause is valid, and therefore enforceable.  Second, if a clause is valid, as a way to prevent you from pursuing your newly found employment opportunity, your employer may ask the Court to grant a temporary and/or permanent injunction.

The second section of this analysis focuses on whether a Court will grant your employer’s request for a temporary or permanent injunction.  If granted, this injunction would prevent you from obtaining employment in any manner which violates the restrictive covenant.

The Validity and Enforceability of Physician Non-Compete Clauses in New York and Connecticut

The laws governing the validity and enforceability of non-compete clauses in New York and Connecticut are fairly similar.  In both states Courts seek to determine if the restraints provided for under the non-compete clause are reasonable.  In making that determination, Courts consider the following factors:  (1) the employer’s need to protect legitimate business interests (such as trade secrets and customer lists), (2) the employee’s need to earn a living and support his or her family, (3) the public’s need to secure the employee’s presence in the labor pool, and (4) the amount of time, and the area restricted under the covenant.

Employer’s Need to Protect Legitimate Business Interests:

In general, Courts have found an employer to have a legitimate business interest in situations where the employer needs to protect against the former employee’s use of a trade secret or a highly valuable patient list.  If the employer is not able to protect the employee from using such things in the course of their future employment, the employer’s business will noticeably suffer.  This is what the Courts will try and protect against through the enforcement of the restrictive covenant.

In Connecticut, however, it is important to note that it is not the employer who needs to prove a legitimate business interest, but instead, the employee who needs to disprove the employer’s need to protect legitimate business interests through enforcement of the non-compete clause.

Employee’s Need to Earn a Living:

When considering the impact of the enforcement of a non-compete clause on the earning potential of a former employee, Courts will try to determine if enforcement of a restrictive covenant will unreasonably prevent the employee from earning a living, and therefore being able to support themselves.  Significantly, Courts noted, however, that this does not mean the operation of a covenant not to compete must maintain a former employee’s income at present levels in order to be found reasonable.  It is the burden of the former employee to prove that if the covenant is enforced it will substantially damage his or her ability to earn a living.

The Public’s Need to Secure Employee’s Services:

The principal objection to restrictive covenants in physician employment contracts is that they can potentially interfere with continuity of care for a patient.  Therefore, a Court is more reluctant to enforce a covenant if the covenant would impact the care of the former employee’s current patients.  There are however, many covenants that are drafted to allow a physician to continue providing post-operative, or other limited care, for current patients.  If a restrictive covenant will allow for such continuity of care, the Court is more likely to find its restrictions reasonable, and enforceable.

Time and Area Restrictions:

The amount of time, and the area restricted under non-compete clauses varies greatly between different employment agreements, depending on the type of services involved and the location of the parties.  In making a finding, Courts will look to whether or not the time and area restrictions are reasonable.  Recent decisions held clauses limiting the former employee for up to a period of five years within a thirty mile radius reasonable.  Reasonableness depends, however, on the specific circumstances of the case.

Other Considerations:

Courts also consider the bargaining power between the parties to the employment contract in determining the reasonableness of a restrictive covenant.  Some Courts may be more reluctant to find a restrictive covenant unenforceable where the employment agreement is created between partners to a practice, rather then when the agreement is held between an employer and an employee.  The Courts have explained this discrepancy on the parties’ ability to negotiate the terms of the employment agreement.  A partner will most likely have a greater ability to negotiate the terms of the contract, than will an employee.

Injunctive Relief:

An injunction is an equitable remedy in the form of a Court order, whereby a party is required to do, or to refrain from doing, certain acts. In this case, those certain acts would include being employed in a way which would violate the restrictive covenant.  When considering an employer’s request for a temporary or permanent injunction, the Courts in New York and Connecticut consider whether the employer has demonstrated that he or she would suffer irreparable injury in the absence of an injunction, that he or she is likely to prevail on the merits of the case, and that the balancing of equities favors the issuance of an injunction.

Irreparable Harm:

In considering the irreparable harm an employer may suffer, a Court will rely on factors such as the employer’s revenues, patient flow and the employer’s ability to maintain their business on a long-term basis.  Such calculations will consider only the employer’s losses, and not the former employee’s gains.

Balancing of the Equities:

When balancing the equities, Courts consider the following: the effect the injunctive relief will have on the employer’s business, the effect that the injunctive relief will have on the employee’s earning potential, and the effect that an injunction will have on the public.  In determining the effect on the employer, the Court analyzes how the employer will benefit from the injunctive relief.

As for the effect on the employee, the Court considers the options available to the employee if the relief is granted.  If the employee can reasonably continue to earn a living, Courts are more willing to grant the employer’s injunctive relief request.  In considering the public interest, Courts look at factors such as the hardship the injunctive relief would have on a doctor’s existing patients and the doctor’s contributions to the surrounding community that would be limited by the granting of injunctive relief.

Connecticut – Adequate Remedy at Law:

In addition to the above factors, Connecticut Courts consider whether the employer has no other adequate remedy at law available to them.  Although some Connecticut Courts have held that the lack of an adequate remedy at law is presumed to be established where a party seeks to enforce a covenant not to compete, not all Courts have relied on that.

The Courts that do rely on that theory, however, state that it is only a rebuttable presumption; meaning that it may be possible for the employee to convince the Court that this presumption does not apply in a certain situation.

The Connecticut Courts that have not followed that presumption have held the presumption to apply only in the limited instances where the calculation of damages may be difficult or impossible and therefore limits the employer’s potential remedies.  These Courts have found that employers have an adequate remedy at law where they are in a position to bring a breach of contract claim, meaning that the employer is able to calculate the damages suffered as a result of the former employee’s actions.

Physician Restrictive Covenant Cases in Connecticut:

As a way of bringing together the above information, and to demonstrate the effects of certain factual situations on an outcome, the following illustrations provide examples of restrictive covenant cases heard and decided by the Connecticut Courts in recent years.

Restrictive covenant valid, Injunction denied:

Opticare, P.C. v. Zimmerman, 2008 Conn. Super. LEXIS 759 (2008).

In this Connecticut case, a doctor entered into an employment contract with physician practice group which provided, among other things, that in the event the doctor voluntarily left the practice but intended to continue practicing medicine he would be prohibited from practicing the type of medicine he practiced with the group, within a specific area for a period of 18 months.  The restricted area was in the shape of a hexagon and ranged from between fifteen to thirty miles from the locations in which the doctor had been employed with the practice group.

After 22 years of employment, the doctor left the physician practice group and opened his own office, practicing the same kind of medicine as he had been, before the 18 month time period had passed and less than four miles away from his former employer’s office.  Upon learning of the physician’s new practice, the practice group asked the Court to grant injunctive relief to prohibit the physician from continuing his practice in violation of the restrictive covenant.

Court Denies Group’s Request:

In denying the group’s request, the Court determined that although the restrictive covenant was valid, the group did not establish a showing of irreparable harm.  The practice group was still in business, and it had failed to demonstrate that the practice was permanently harmed in any way.  The Court also determined that the employer had available to them an adequate remedy at law because the employer had the ability to calculate the damages incurred as a result of the physician’s actions.

Finally, the Court found that the equities balanced in favor of the former employee, due in part to the fact that the doctor frequently donated his time to assisting uninsured premature infants at local hospitals and that an injunction would place an undue hardship on his current patients.

Restrictive covenant valid:

Fairfield County Bariatrics v. Ehrlich, 2010 Conn. Super. LEXIS 568 (2010).

The case of Fairfield County Bariatrics v. Ehrlich, is a case in which the restrictive covenant was deemed valid and injunctive relief was granted to the employer.  It involved a situation where a physician developed a very prominent practice performing bariatric surgeries for the physician practice group with whom he was employed and was a one-third shareholder.

As part of his employment with the physician practice group, the physician signed an employment agreement which, among other things, provided that for a period of two years following the termination of his employment, the physician could not practice medicine or general surgery within 15 miles of the practice’s office, and that he could not practice bariatric surgery in five local hospitals.

Following his termination from the group, the physician retrieved a list of the patients he had treated during his employment with the physician practice group.  The physician contacted each patient and informed them that he was no longer associated with the group and directed them to contact him at his new office.

The physician’s new office was located within the restricted area provided for in the employment agreement.  Additionally, the physician continued to perform bariatric surgeries at the hospitals restricted under the restrictive covenant in the employment agreement.

Injunction granted:

The Court held the restrictive covenant valid, finding the length of time and area of coverage to be within reasonable limitations.  Furthermore, the Court determined that the physician practice group had legitimate business interests that needed the protection of the restrictive covenant.

The Court relied on the practice’s fear that because of the extremely large amount of bariatric surgeries the physician performed on a yearly basis, if the physician were allowed to continue practicing bariatric surgeries at the hospitals within the county, it would drastically dilute the number of surgeries performed at the hospitals in which the practice performed those surgeries.

Additionally, the Court determined that the physician’s ability to earn an income was not so restricted by the covenant as to make it unreasonable.  Under the covenant, the physician was able to perform surgeries throughout the majority of the county in which he resided, and was able to continue providing post-operative care for his current patients.

Finally, the Court determined that the public’s need to secure the physician’s services would only be slightly impacted and that because the physician was still able to provide post-operative care, the public’s need did not render this covenant invalid.

Continuing in their decision, the Court granted the practice’s request for injunctive relief as the Court believed the practice was likely to prevail at a trial.  In its decision the Court found the physician practice group would suffer irreparable harm if injunctive relief were not granted as it was able to demonstrate the physician had the ability to drastically dilute the number of available surgeries.  As for the balance of equities, the Court determined the harm the physician practice group could potentially suffer if their request was denied was much greater than the harm the physician would suffer if the relief was granted.

Restrictive covenant invalid:

Merryfield Animal Hosp. v. Mackay, 2002 Conn. Super. LEXIS 2628 (2002).

In this Connecticut case, the Court determined that the restrictive covenant included in the employment agreement was invalid.  Consequently, the Court denied the employer’s request for injunctive relief.  The doctor in this case had been employed under an employment agreement that contained a non-compete provision.

This provision restricted the employee from owning, managing, operating, controlling, participating in, or being employed or in any way connected with an organization providing the services provided by the employer for a period of two years after his termination, and within a seven mile radius from the employer’s locations.

Shortly after his termination the physician obtained employment with a different practice group performing the same services he had been for his former employer. His new employment was located within the seven mile radius restricted under the restrictive covenant.  The employer turned to the Court, seeking a temporary injunction which would order the doctor to comply with the specific provisions of the restrictive covenant.

Injunction denied:

Although the Court found the time and area restrictions provided for in the restrictive covenant reasonable, it ultimately determined that the covenant was unenforceable and therefore denied the employer’s request.  In doing so the Court relied exclusively on its finding that the restriction under the covenant was overly broad and not reasonably necessary for the fair protection of the group’s business.

If enforced, the language of the covenant would have prevented the doctor, not only from his new position, but even from employment that could in no way bring him in competition with his former employer. Finding the expansive limitations provided for by the language of the restrictive covenant unreasonable, the Court determined the covenant unenforceable, and consequently denied the employer’s request for injunctive relief.

Restrictive covenant invalid, Injunction denied:

Merryfield Animal Hosp. v. Mackay, 2002 Conn. Super. LEXIS 4099 (2002).

A Connecticut Court determined the restrictive covenant at question in this case to be overly protective of the employer’s interest, and therefore determined that the covenant was invalid.  Pursuant to the terms of that clause the doctor in this case agreed he would not involve himself with or be employed by a business providing the professional services he provided for the practice within a seven-mile radius of the practice, and for two years after his employment contract terminated. 

After providing written notice of his termination, the doctor accepted a position with another practice, located slightly less than seven miles from his former employer’s office.  During the course of his new employment the doctor did not solicit any of his former employer’s patients and even rejected any patients he knew to have been patients of his old practice.

The Court, therefore found no evidence of a legitimate business interest that the practice needed to protect.  Furthermore, the practice was unable to demonstrate it suffered or would suffer any loss as a result of the doctor’s actions.  Consequently, the Court determined the restrictive covenant was unenforceable and denied the practice’s request for injunctive relief.

Physician Restrictive Covenant Cases in New York:

As a way of bringing together the above information, and to demonstrate the effects of certain factual situations on an outcome, the following illustrations provide examples of restrictive covenant cases heard and decided by New York Courts.

Restrictive covenant valid:

Millet v. Slocum, 4 A.D.2d 528 (1957).

Following the termination of his employment as a partner in a physician partnership, the physician in this case brought an action before the Court asking the Court to render the restrictive covenant contained in his employment agreement unenforceable.  Under the terms of his employment agreement, following his termination, the physician was barred from practicing medicine or surgery within a 25 mile radius from the city in which the partnership was located for a two-year period.  The partnership, in response, asked the Court for injunctive relief which would prevent the physician from practicing in contravention of the employment agreement.

Before working with this partnership, the physician never worked as a physician in New York State.  During the time the physician served the partnership he developed a professional reputation for competence and earned the trust of the partnership’s patients. As a result, the Court concluded that if the physician were able to directly compete with the partnership, the remaining partners would suffer a loss of patients and good will.

Injunction denied:

Considering next, the physician’s ability to earn a living, the Court decided that the hardship imposed on the physician was not, when balanced with the needs of the partnership, sufficient to invalidate the covenant.  The physician had the ability to practice medicine and surgery anywhere outside of the 25 mile radius, and the Court noted that since he had been able to come to New York and build such a strong professional reputation when beginning his work with the practice, it would not be so unreasonable for him to do so again.  The Court therefore, concluded that the restrictive covenant was valid and enforceable.

Despite the validity of the restrictive covenant, the Court denied the partnership’s request for injunctive relief based on its finding that the partnership breached the partnership agreement when it expelled the physician from the partnership without justification, as was required pursuant to the agreement.  The Court held the partnership’s actions constituted such a breach of the partnership agreement as to not entitle the partnership to the injunctive relief requested.

Restrictive covenant valid:

Gelder Medical Group v. Webber, 41 N.Y.2d 680 (1977).

After a few years of employment as a partner to a partnership practice, the physician in this case was expelled pursuant to the partnership agreement.  Under the terms of the partnership agreement, the physician had agreed not to practice his profession within a radius of 30 miles of the village in which the partnership was located for a period of five years.

Disregarding the restrictive covenant, the physician resumed his surgical practice as a single practitioner, practicing in the same village as the partnership and within two months of his expulsion.  The partnership, in an effort to protect its practice, asked the Court to enforce the restrictive covenant and grant injunctive relief.

Injunction granted:

The Court ultimately determined this restrictive covenant was valid.  Its decision was due, in part, to the small size of the village in which the partnership was located and had built its practice.  In such a small area, the threat of competition from the physician, if allowed, could result in serious damage to the partnership’s number of patients and its revenues.  The Court also considered the impact that the covenant could have on the physician’s ability to earn a living and found that throughout the course of his career, this physician had repeatedly changed professional associations within a range of thousands of miles.

Therefore, the Court did not credit the physician’s argument that relocating his practice would unreasonably impair his ability to earn an income.  Finally, the Court considered the interest of the public and noted the public would not be affected by the enforcement of this covenant, as they could easily obtain the services provided by the physician elsewhere.  Granting the employer’s injunction, the Court noted that the damage the partnership would suffer without injunctive relief, when balanced with the losses the physician may face if the covenant were enforced, justified the enforcement of this restrictive covenant.

Restrictive covenant invalid, Injunction denied:

Michael I. Weintraub, M. D., P. C. v. Schwartz, 131 A.D.2d 663 (1987). 

The physician in this case had been employed by a certain professional practice group for a period of two years at the time his employment contract was terminated.  Pursuant to the terms of his employment agreement, the physician was restricted from engaging in the type of services he performed for the physician practice group within a five mile radius from the professional practice’s office, and within a five mile radius of any hospital at which he had worked at on behalf of the professional practice for a period of one year after the effective date of his termination.

Before that one-year period lapsed the physician established an office to perform the restricted type of services within five miles from a hospital where the physician worked on the group’s behalf.  The professional group initiated an action against the physician to enforce the restrictive covenant and prevent him from breaching his employment agreement.

In reviewing the restrictive covenant, the Court determined the provision restricting the physician from practicing within five miles of the group’s offices was reasonable and enforceable.  The Court, however, found the portion of the covenant prohibiting the physician from practicing within a five-mile radius of any hospital where he worked on the group’s behalf was overly broad and oppressive, and thus unenforceable.

If the physician had been required to follow the terms of the covenant it would essentially prohibit him from practicing at or near any of the major hospitals in the two nearest counties.  The Court furthered noted an absence of evidence indicating the group’s business related concerns were implicated in any manner through the physician’s breach of the restrictive covenant.  Consequently, the Court denied the group’s motion for injunctive relief.

Restrictive Covenant Severed:

Karpinski v. Ingrasci, 28 N.Y.2d 45 (1971).

In the following case the Court held even though the restrictive covenant contained an unreasonable provision, the remaining restrictions provided for under the agreement would be enforceable against the former physician employee.  In essence, the Court severed the unreasonable restriction from the restrictive covenant, and held the remainder to be valid.  This situation involved a dentist employed by an oral surgeon.  As part of his employment with the oral surgeon he agreed to never practice dentistry or oral surgery in any of the surrounding counties except in association with the oral surgeon.

Upon voluntarily ending his employment with the oral surgeon, the dentist opened his own office in violation of the restrictive covenant.  After the competition created by the dentist’s new office forced the oral surgeon to close one of his offices, the oral surgeon asked the Court to enforce the restrictive covenant.

The Court ultimately held the employer was entitled to an injunction barring the dentist from practicing oral surgery in the five specified counties named in the covenant, but that the covenant’s restriction on the practice of dentistry was too broad.  Since the oral surgeon’s business consisted only of performing oral surgeries and related operations, a dental practice providing only dentistry services, and no oral surgery services, would provide no direct competition.

The Court, therefore determining the restriction on the practice of dentistry to be too broad, severed that restriction from the covenant, but enforced the remaining provisions of the agreement.

Contact Us:

Situations involving these restrictive covenants, or non-compete agreements, are very fact specific, requiring case by case analysis and determinations.  Determining the consequences of your employment agreement and your options will require an in-depth review.  A violation of a restrictive covenant, if such covenant is in fact enforceable, may result in other contractual claims being brought against you by a former employer.  If you have any questions relating to your restrictive covenant or would like to discuss any element of your employment agreement, please contact Joseph Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

What To Know About Your Severance Package

During these economic times, many companies big and small, are facing the hard reality of layoffs. As hard as it is for companies, it is even harder for employees. Faced with no job and a bare economy, accepting a severance package might seem like the best choice.  But before signing anything, it is important to understand the basics of the severance package and the potential rights that might be relinquished in the process.

(1)        Time to Consider the Severance Package:

A prevalent misconception is that all employees are entitled to twenty-one (21) days to review severance package offers. Unfortunately, that is not the case.  In the case where the employer is only offering a severance package to one employee, and that employee is under the age of forty (40), there is no specific time to review the documents that is required by law. However, as the severance package must be made “knowingly and voluntarily,” that allows the employee some time to consider the severance agreement.  There is no statutory minimum amount of time.

If, however, the employee being offered the severance agreement is forty (40) years or older, he or she is protected by the Age Discrimination in Employment Act (“ADEA”) of the Older Workers Benefit Protection Act (“OWBPA”). By law, when only one employee is offered the severance agreement and a release of ADEA claims is included, the employer must provide the employee with twenty-one (21) days to review and consider the proposed severance agreement. Moreover, if the employer and employee engage in negotiations, the consideration period commences on the date of the employer’s final offer.

If more than one employee is terminated at or around the same time, it is considered a “group layoff.”  By law, when a severance agreement is offered as part of a group layoff, and a single employee is over the age of forty (40), and a release of ADEA claims is included, then every employee regardless of age must be given forty-five (45) days to consider the agreement.

(2)        Release of Claims:

Most severance agreements contain a release of a variety of claims, including claims you may have based upon your age, race, national origin, gender, disability, religion, among others. It may also include a release of all claims, whether known to you or not at the signing of the agreement.

However, the United States Equal Employment Opportunities Commission (“EEOC”) has held that, although the severance agreement may restrict the employee’s ability to file a lawsuit, the release cannot restrict the rights of an employee to file a charge of discrimination with the EEOC, nor can the severance agreement limit an employee’s right to testify, assist or participate in an investigation, hearing or other proceeding conducted by the EEOC. Furthermore, the EEOC has declared that an agreement cannot waive an employee’s rights regarding acts of discrimination that occur after the signing of the agreement.

(3)        Seven (7) Day Revocation Period:

When a severance agreement contains an ADEA release of claims, by law, the employer must provide you with seven (7) days to revoke the agreement after signing it. This seven (7) day window cannot be waived or changed by either party.

(4)        Ability to Consult with an Attorney:

Severance packages generally contain more than just the release of ADEA claims, but also claims under Title VII of the Civil Rights Act, Americans with Disabilities Act, Employee Retirement Income Security Act, retaliation, whistle blowing, breach of contract, invasion of privacy, among others. Given the breadth of the claims released, before the signing of a severance agreement, it is extremely important to consult with an attorney prior to its execution.

Moreover, when the severance agreement contains a release, the agreement must specifically advise the employee to seek the advice of any attorney.  Faced with financial distress because of the layoff, you may not be able to think objectively concerning your rights and options. It is best to consult an attorney.

(5)        Consideration:

Consideration is required for every agreement. That means that an employee must receive something of value in exchange for giving up certain rights. That “something of value” must be above and beyond what the employee would otherwise be entitled to.

(6)        Ability to Negotiate:

Despite the “take it or leave it” undertones of an employer, generally, many employers will negotiate severance on some level. Given that, there is also a risk that an employer will revoke the offer of severance if negotiation is attempted.  Your chances of negotiating successfully increase if there is a claim that your particular severance package is not fair in light of your industry, your position, or the circumstances of your employment.  Additionally, the negotiations do not need to focus on the dollar amount connected with the severance agreement.  Employers might be willing to extend insurance coverage, disability benefits, or other items.

(7)        Gather All Information:

Before deciding to accept, negotiate, or reject a severance package, it is important to understand completely what is being offered to you, including compensation, benefits and insurance.  If you are in an industry that provides for deferred stock options or bonus, it is important to understand whether you would still be entitled to it.   You should gather information concerning your employer’s welfare plans, health plans, vacation and sick leave policies, as well as any structured bonus plans or stock options.  If the severance package is only offering you what you would be entitled to, the agreement may lack adequate consideration.

(8)        Restrictive Covenants:

Many employers will place some kind of restrictive covenant into the severance package. These range from confidentiality clauses, to non- disclosure agreements, to non-solicitation agreements, to non-compete agreements.  Therefore, it is important to understand how signing the severance agreement may restrict your ability to find new employment.

Before you sign a severance agreement, it is important to fully understand your rights and the consequences of accepting the offer. The attorneys at Maya Murphy, P.C., have years of experience in all sectors of employment law. If you have any questions relating to your severance agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

Connecticut Courts Strike Down Unreasonable Non-Compete Agreements

Connecticut Courts Strike Down Unreasonable Non-Compete Agreements

Have you lost your job?  Your career? This economy is brutal and has affected millions of Americans.  Countless people have been fired or laid off, and a lot of folks are struggling to regain their livelihood, especially in the banking industry.  The current job market is lean and extremely competitive, and as a result, finding a replacement job to make ends meet has become difficult.  Remarkably, in some instances, it is not the economy that is preventing these folks from rejoining the ranks of the employed, but rather it is their former employers!

Assume this scenario for a moment.  Stock-Broker was working for JPMorgan in New York City, and her employment ended. She was either let go because of the economy or she just wanted a change in scenery.  After her employment with JPMorgan came to end, she received an offer from Morgan Stanley in Stamford, a competitor with JPMorgan in the investment banking industry.  Morgan Stanley is great.  They give free bagels out for breakfast on Wednesdays.  Stock-Broker decides she wants to take the job with Morgan Stanley, but there is a caveat.

When Stock-Broker began working for JPMorgan she signed an agreement that she would not work for another investment bank within a 60-mile radius for a year. The question then becomes not whether Stock-Broker wants to work for Morgan Stanley, but does the law allow her?  Does this scenario seem familiar to you?  If it does, please continue reading.

What is a Non-Compete Agreement

Typically, when an investment banker begins a career with a new employer, he or she signs a “non-compete” agreement.  This agreement essentially bars a former employee from engaging in a business that competes with the former employer.  This is certainly the case with hundreds of New York investment banks who require their bankers to sign a non-compete before they begin working.  When determining whether Stock-Broker in our hypothetical above can work for another investment bank, the legality of her non-compete agreement must be examined.

How Connecticut Approaches Non-Compete Agreements

In Connecticut, courts take a hard-line approach to non-compete agreements, and usually view them as against public policy.  This does not mean that all non-compete agreements are struck down, however they must be reasonable in order to survive.  To determine the reasonableness of a non-compete agreement, Connecticut courts take numerous factors into account such as the length of time the restriction lasts, the extent of the geographic area the former employee is barred from working in, and the public interest. See Robert S. Weiss & Associates, Inc. v. Wiederlight, 208 Conn. 525, 529 n.2, 546 A.2d 216 (1988).

Under this multiple factor test, if any restriction is found to be unreasonable, then the agreement fails, and the employee is free to work where he or she will.   A non-compete agreement usually fails because the time-limit or geographic boundaries are unreasonable.  Typically, if the agreement restricts the former employee from engaging in a competing business within one year of termination and within a five-mile radius, a Connecticut court will not overturn it.  In contrast, during a non-compete agreement dispute, a Connecticut court quickly struck down a 50-mile radius restriction. See generally Braman Chemicals, Conn. Super. Ct.  LEXIS 3753 (2006).

Furthermore, Connecticut courts have routinely struck down non-compete agreements that restrict anything more than a 35-mile radius.  See e.g., Nesko Corp. v. Fontaine, 19 Conn. Super.  Ct. 160, 110 A.2d 631 (1954); see also Trans-Clean Corp. v. Terrell, Conn. Super. Ct. LEXIS 717 (1998) (court noted that the 60-mile radius from the employer’s home office in Stratford encompassed approximately 75% of the state); see also Timenterial, Inc. v. Dagata, 29 Conn. Super. Ct. 180, 277 A.2d 512 (1971) (50-mile radius restriction held invalid).

Analyzing a Hypothetical Non-Compete Agreement

Apply these factors to our Morgan Stanley hypothetical.  Remember, Stock-Broker signed a non-compete agreement with JPMorgan that provided she would not work for a competing investment bank within a 60-mile radius. Unfortunately for Stock-Broker, Stamford is in Connecticut and only 40 miles away.  Stamford’s location falls within the 60-mile radius in JPMorgan’s non-compete agreement, and thus Stock-Broker would be violating the agreement if she took the job.

Stock-Broker takes the job anyway and JPMorgan sues her.  Stock-Broker argues that her non-compete agreement is unreasonable and therefore invalid.  The Connecticut court will apply the five factor test, and based on past rulings, most likely find that a 60-mile radius is too large of a geographic area.  Subsequently, Stock-Broker will then be allowed to take the position with Morgan Stanley.

Now, let us assume that JP Morgan is also in Stamford, and Stock-Broker signed a non-compete that restricted her from working with a competing business within a 15-mile radius.  JP Morgan sues Stock-Broker and she again argues to invalidate the non-compete for unreasonableness.  This time however, the outcome will be different.  The geographic distance of a 15-mile radius is negligible compared to a 60-mile radius, and Connecticut courts have routinely upheld non-competes that contain such a distance.

Conclusion

Non-compete agreements prevent thousands of stock-brokers from regaining employment in investment banking.  A lot of former employees believe there is nothing that can be done; when in reality a lot of non-compete agreements would most likely not hold up in court.  If you’re a stock-broker who was fired or laid off, and is struggling to find a replacement job in the investment banking world because of your employment contract, call us here at Maya Murphy P.C. and we’ll give you free advice.

Bridgeport DJ Says Spit Cost Her Her Job

BRIDGEPORT –

As Prozac Girl on the controversial, syndicated “Star & Buc Wild Morning Show,” Keysha Whitaker often had to deal with sophomoric abuse thrown at her. But when it came to being spit at, Whitaker drew the line. That cost Whitaker her job, she claims.

As a result, Whitaker, who according to court papers lives on Avalon Drive in Milford, filed a multimillion-dollar lawsuit claiming intentional infliction of emotional distress, assault, defamation, and violation of the Americans with Disability Act. Her on-air character, Prozac Girl, was based on her real-life bout with depression.

U.S. District Judge Janet C. Hall rejected Clear Channel Broadcasting’s request to dismiss the case against the company; Troi Torain, better known as hip-hop shock jock DJ Star; and Miguel Candelaria, the show’s producer. The judge listened to the two sides argue their cases for about an hour before ruling from the bench. Hall dismissed the assault charge after finding the suit claims only an oral threat was made and that Star did not actually attempt to spit on her.

However, Hall said Bryan Carmody, Whitaker’s lawyer, could resurrect that claim if he can show Torain did attempt to spit on his client.

Case Background

The syndicated show began broadcasting on Clear Channel’s WPPH-FM 104.1 in Hartford in April 2004. More recently, it called WWPR-FM Power 105.1 in New York home. But Torain’s actions led to Clear Channel pulling the show from the air and dropping its $4 million Star from the payroll.

On that day, Torain made on- the-air comments about the 4-year-old daughter of DJ Envy, a rival morning host on Hot 97, which once broadcast Torain’s show. DJ Envy’s real name is Rashawn Casey.

Torain maintained his comments were in response to earlier ones made against his mother by Casey.

On May 13, 2006, Torain was arrested on charges of endangering the welfare of a child as a result of his comments. The charge carries a maximum 2-year sentence. He was released on $2,000 bond.

Whitaker was just one of a number of characters on the show. Others included Buc Wild, Torain’s real-life half-brother; “White Trash” Helene, from Hamden; and “Chris the Queer,” the show’s gay newsman.

In February 2004, Clear Channel hired Whitaker to play the role of Prozac Girl at a salary of $60,000 a year, the suit claims. Additionally, she was to be paid a $20,000 lump sum each time the show was syndicated to a new locale, according to the suit.

The show began airing on 104.1 WPHH in Hartford in April 2004.

The Incident

During the May 24, 2004, broadcast, Torain spat on Candelaria and said, “all of you in here are going to get anointed with my spit,” the suit alleges.

Following the show, the suit claims, Whitaker told Candelaria she would resign if Torain insisted upon “anointing her with his saliva.”

Three days later, the suit claims, Candelaria shot a “phlegm-laden” launch at a character named “Crossover Negro Reese,” a newsman. Torain then threatened to spit on Whitaker, who again objected, the suit charges.

After the show, the suit says, Candelaria demanded a letter of resignation from Whitaker, stripped her of her office keys and walked her out of the building.

The suit further claims Torain called Whitaker after she left and told her she was fired because she “is sick,” “disabled” and has depression.

Since then, Carmody said, his client has suffered severely.

“She’s not working,” he said.

The parties in the suit could not be reached for comment Wednesday evening.

Connecticut Post
By: Michael P. Mayko

Connecticut School Districts and Bullying: What Can Parents Do?

I was greeted this morning with a very unfortunate email.  The email concerned bullying in Westport Schools and included a heart wrenching video of an 8th grade girl claiming to be a victim of bullying in Westport schools. (http://patch.com/A-gcKG) It is just not enough to feel sorry for this victim of bullying, we need to question the effectiveness of the current law and policies in place to avoid the tragic consequences that other towns have dealt with because their students were victims of bullying.

I previously blogged about the revisions to Connecticut’s law against bullying in 2008.  Under Connecticut General Statute section 10-222d, the law requires “any overt acts by a student or group of students directed against another student with the intent to ridicule, harass, humiliate or intimidate the other student while on school grounds, at a school sponsored activity or on a school bus, which acts are committed more than once against any student during the school year.” In addition to definitional changes, the statute requires:

  1.  teachers and other staff members who witness acts of bullying to make written notification to school administrators;
  2. prohibits disciplinary actions based solely on the basis of an anonymous report of bullying;
  3. requires prevention strategies as well as interventions strategies;
  4. requires that parents of a student who commits verified acts of bullying or against whom such bullying occurred be notified by each school and be invited to attend at least one meeting;
  5. requires school to annually report the number of verified acts of bullying to the State Department of Education (DOE);
  6. no later than February 1, 2009, boards must submit the bullying policies to the DOE;
  7. no later than July 1, 2009, boards must include their bullying policy in their school district’s publications of rules, procedures and standards of conduct for school and in all of its student handbooks, and
  8.  effective July 1, 2009, boards must now provide in-service training for its teacher and administrators on prevention of bullying.

Westport responded to the requirements of this statute with a comprehensive bullying policy which can be found on the school district’s website under the tab for parents, and then selecting policies.  Here is the direct link to the policy: (http://www2.westport.k12.ct.us/media/policies/prohibition_against_bullying_5131.911_revised_8.25.2008.pdf)

Armed with Connecticut’s law and Westport’s policy, what should we do as parents, community members, and professionals?  I do not profess to have the answers but at a minimum, we should discuss this with our children, question the school administrators, guidance staff and teachers. Together we should challenge ourselves to make a difference using the channels available to us.  There are ways that we can help to effectuate change before it is too late.  If you know of a child affected by bullying, please act on their behalf.  Not every student will post a video to tell you this is happening. If the school is not addressing the bullying in a meaningful way to eradicate the conduct, legal redress is available and the courts will readily intervene.

If you have any questions please feel free to contact me by telephone in the Firm’s Westport office at (203) 221-3100 or by e-mail at SMaya@Mayalaw.com. Attorney Maya is a partner at Maya Murphy, P.C. Her practice is limited to Education Law and Trusts and Estates.

Identifying de facto Geographical Limitations in Connecticut Non-Compete Agreement

Identifying de facto Geographical Limitations on Connecticut Non-Compete Agreement
New Haven Tobacco Co., Inc. v. Perrelli, 18 Conn.App. 531

New Haven Tobacco Company operated a wholesale tobacco business and entered into an employment contract with Mr. Frank Perrelli in December 1980. As part of the contract Mr. Perrelli signed a non-compete agreement wherein he agreed to “not directly or indirectly sell products similar to those of the Employer (New Haven Tobacco Co.) to any of the customers he has dealt with or has discovered and became aware of while in the employ of the Employer for a period of twenty-four months from the termination of his employment”. In November 1981 Mr. Perrelli voluntarily left the employ of New Haven Tobacco and proceeded to start his own wholesale tobacco business. New Haven Tobacco sued to recover money damages and for injunctive relief in the form of a court order restraining Mr. Perrelli’s wholesale tobacco business activities.
The trial court found in favor of Mr. Perrelli and denied New Haven Tobacco’s injunction application. It found that the agreement lacked geographical limitations and went against the public’s interest New Haven Tobacco appealed to the Appellate Court of Connecticut claiming that the trial court erred when it held that the non-compete agreement was unenforceable. The Appellate Court reversed the trial court’s decision and found in favor of New Haven Tobacco. The Appellate Court held that the agreement in dispute focused not on Mr. Perrelli engaging in a certain business sector, but instead on the prohibition of transacting with a specific group of customers, namely those of his former employer, New Haven Tobacco. By limiting the customers the agreement applied to, the agreement in essence instituted a geographical limitation. The customer list was local and de facto limited the agreement to the greater New Haven area. The Appellate Court also held that the trial court erred with regard to invalidating the non-compete agreement on the grounds of public interest. The trial court concluded that the provisions of the agreement aided in creating and maintaining a monopoly on the wholesale tobacco business and thus disadvantaged customers and was contrary to public interest. The Appellate Court however found this assertion to be unsubstantiated and held that the non-compete agreement did not unreasonably interfere with the public’ interest. The enforcement of the non-compete agreement would not disadvantage the public or place hardships on individuals wishing to transact in the local tobacco wholesale industry.
If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

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Physician Adequately Alleges Violation of CUTPA Against His Former Counsel

In a recent decision, the Superior Court for the Judicial District of Stamford/Norwalk held that a plaintiff physician adequately alleged a violation of the Connecticut Unfair Practices Act against his former counsel.  More specifically, the Court held that, as alleged, the defendant law firm’s actions were entrepreneurial in nature, and, thus, were not subject to immunity which ordinarily attaches to conduct involving legal representation.

In reaching its decision, the Court relied on the following facts, as alleged in the plaintiff’s complaint:

In this action, the plaintiff has brought suit against the defendants Yale-New Haven Health Services, Greenwich Hospital, MCIC Vermont, Inc. and the law firm of Heidell, Pittoni, Murphy & Bach, LLP (the defendant).[1]The operative pleading, which is the plaintiffs amended complaint dated August 20, 2010, alleges the following relevant facts. Until January 3, 2008, the plaintiff was employed by Yale-New Haven Health Services as the director of the emergency services department at Greenwich Hospital. On August 4, 2006, the plaintiff met and treated a patient during the course of his employment. Subsequent to this treatment, the patient initiated a medical malpractice lawsuit against Greenwich Hospital and five physicians including the plaintiff. As a result of this lawsuit, the plaintiff was contacted by Y ale-New Haven Health Services and told that he could be provided a defense in the Sousa lawsuit pursuant to an undisclosed insurance policy provided by MCIC Vermont, Inc. The plaintiff was further told that the defendant law firm would represent all five of the physicians who were defendants in the underlying lawsuit, as well as Greenwich Hospital. According to the complaint, the plaintiff was not told that he had a right to obtain independent counsel or that he had the ability to object to any settlements. There was no written retainer agreement between the plaintiff and the defendant law firm. The plaintiff further alleges that the defendant law firm never informed him of any potential conflicts of interest arising from this joint representation. In fact, upon meeting with one of the defendant’s partners, the plaintiff was told that it was “not necessary” for him to obtain independent counsel because in “most cases,” settlements were covered entirely by the subject insurance policy and that individual physicians were “very rarely” reported to the National Practitioners Data Bank pursuant to 45 C.F.R. § 60.5.

According to the plaintiff, “throughout the representation [the defendant] failed to exercise the degree of skill and learning commonly applied to protect a client in Plaintiffs position as independent from the competing interests of common clients, including [Greenwich Hospital].” Specifically, the plaintiff alleges that the defendant failed to inform him in a timely manner of the occurrence of the deposition of the plaintiff in the underlying case, which deprived him of an opportunity to be present and provide input. The plaintiff further alleges that he was not told for nine months that the defendant had obtained the services of an independent medical expert. In November 2009, the plaintiff was informed that the case was settled on his behalf and that he would not be reported to the National Practitioners Data Bank. When the plaintiff asked whether he could object to the settlement, the plaintiff was told that he could not because of the contractual arrangement between MCIC Vermont, Inc. and Greenwich Hospital or Yale-New Haven Health Services. The plaintiff was further informed that he would not be named as a payor of the settlement proceeds. Several weeks later, however, the plaintiff was in fact told that he would be named in the settlement and reported to the National Practitioners Data Bank. The reason for this decision was because of an independent expert opinion that the plaintiff was not told about until after the settlement. None of the other physicians represented by the defendant were reported to the National Practitioners Data Bank. On December 22, 2009, the plaintiff eventually obtained independent counsel and the defendant has refused to turn over relevant documents to the plaintiffs new attorneys.

As a result of all of this conduct, the plaintiff alleges the following claims: (1) legal malpractice against the defendant; (2) breach of fiduciary duty against the defendant; (3) breach of fiduciary duty against MCIC Vermont, Inc.; (4) breach of contract against Greenwich Hospital; (5) breach of contract against Yale-New Haven Health Services; (6) breach of the covenant of good faith and fair dealing against Greenwich Hospital; (7) breach of the covenant of good faith and fair dealing against Yale-New Haven Health Services; (8) breach of the covenant of good faith and fair dealing against MCI C Vermont, Inc.; (9) violations of the Connecticut Unfair Trade Practices Act, General Statutes § 42-1a et seq. (CUTP A), against the defendant; (10) negligence against MCIC Vermont, Inc.; (11) violations of CUTP A against MCIC Vermont, Inc. and (12) violations of the Connecticut Unfair Insurance Practices Act, General Statutes § 3Sa-S15 et seq. (CUlPA) against MCIC Vermont, Inc.

On August 20, 2010, the defendant filed a motion to strike and a memorandum of law in support of its motion (Dkt. Entries 107.00 and 10S.00).  As originally filed, the defendant’s motion sought to strike counts one and six, as well as the prayer for relief associated with count one, which were located in the plaintiffs revised complaint dated August 5, 2010. The plaintiff filed a memorandum of law in opposition to this motion on September 2, 2010 (Dkt. Entry 112.00). Following the filing of the defendant’s motion to strike, on August 23, 2010, the plaintiff filed a request for leave to file an amended complaint, as well as a proposed amended complaint. This complaint is now the operative complaint in the case.2  In this amended complaint, the plaintiff added a new cause of action against the defendant for breach of fiduciary duty and changed the numbering of the counts that are directed to the plaintiff. As a result, on October 4, 2010, the defendant filed a supplemental motion to strike and supporting memorandum of law addressing count two (Dkt. Entry121.00 and 123.00). The plaintiff further filed a memorandum of law in opposition to this supplemental motion to strike on November 5, 2010 (Dkt. EntryI28.00). When read together, the defendant’s original and supplemental motions to strike request that the court strike all of the counts levied against the defendant in the plaintiffs amended complaint dated August 20, 2010. These are counts one, two and nine. The defendant is also moving to strike the portions of the prayer for relief associated with count one that seek punitive damages and attorney’s fees. The court heard argument in this matter at short calendar on December 6, 2010.

From a legal perspective, the Court reasoned as follows:

“The purpose of a motion to strike is to contest … the legal sufficiency of the allegations of any complaint … to state a claim upon which relief can be granted.” (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). In a motion to strike, “the moving party admits all facts well pleaded.” RK Constructors, Inc. v. Fusco Corp., 231 Conn. 381,383 n.2, 650 A.2d 153 (1994). Therefore, “[i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied.” (Internal quotation marks omitted.) Batte-Homgren v. Commissioner o/Public Health, 281 Conn. 277,294,914 A.2d 996 (2007). Nevertheless, “[a] motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged.” (internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 498. When deciding a motion to strike, the court must “construe the complaint in the manner most favorable to sustaining its legal sufficiency.” (internal quotation marks omitted.) Sullivan v. Lake Com pounce Theme Park, Inc., 277 Conn. 113, 117,889 A.2d 810 (2006).

The defendant first moves to strike count nine alleging CUTP A on the ground that the plaintiff fails to allege facts involving the entrepreneurial aspects of the defendant’s law practice.3 In its memorandum of law, the defendant argues that all of the allegations in this count arise from the defendant’s legal representation of the plaintiff and that such allegations cannot form a legally cognizable CUTPA claim against a law firm. As a result of this immunity from CUTPA liability, the defendant argues that count nine is legally insufficient. In response, the plaintiff argues that he alleges facts involving the defendant’s “engaging and disengaging of clients, its billing practices and fees.” Specifically, the plaintiff contends that he alleges actions taken by the defendant in order to secure the plaintiff as a client and prevent him from obtaining independent counsel. Furthermore, the plaintiff argues that he alleges facts involving the defendant’s improper billing practices. Consequently, the plaintiff contends that count nine sets forth a legally viable CUTPA cause of action.

“[I]n general, CUTPA applies to the conduct of attorneys…. The statute’s regulation of the conduct of any trade or commerce does not totally exclude all conduct of the profession of law. . .. Nevertheless, [the Connecticut Supreme Court has] declined to hold that every provision of CUTPA permits regulation of every aspect of the practice of law…. [The Supreme Court has] stated, instead, that, only the entrepreneurial aspects of the practice of law are covered by CUTPA. … [P]rofessional negligence that is, malpractice does not fall under CUTPA.” (Citations omitted; internal quotation marks omitted.) Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 781, 802 A.2d 44 (2002). “Our CUTPA cases illustrate that the most significant question in considering a CUTP A claim against an attorney is whether the allegedly improper conduct is part of the attorney’s professional representation of a client or is part of the entrepreneurial aspect of practicing law.” Id. “The ‘entrepreneurial’ exception is just that, a specific exception from CUTP A immunity for a well-defined set of activities-advertising and bill collection, for example.” Id., 782; see also Haynes v. Yale-New Haven Hospital, 243 Conn. 17,34-38,699 A.2d 964 (1997) (stating that CUTPA can apply to the professions of law and medicine, but only for entrepreneurial aspects such as solicitation of clients and billing).

In paragraph fourteen of count one, which is incorporated by reference into count nine, the plaintiff alleges that “at the outset of the representation, [he] inquired as to whether he needed separate counsel and was told it was ‘not necessary,’ especially as in ‘most cases,’ settlements were covered entirely by [MCIC Vermont, Inc.] on behalf of [Greenwich Hospital] and [Yale-New Haven Health Services] ….” As further alleged in paragraphs thirty-two and thirty-three of count nine, “[t]he representation of all individual physicians and [Greenwich Hospital] in the Sousa lawsuit, while purposefully overlooking potential and actual conflicts of interest, permitted [the defendant] to bill numerous hours above and beyond what it would have been able to bill if it only represented one physician or one hospital” and “[i]t is and/or was [the defendant’s] pattern and practice to increase billable hours, regardless of its ethical obligations to its individual clients.” If read in a light most favorable to the pleader and accepted as true, these allegations suggest that the defendant failed to divulge a potential conflict of interest in order to convince the plaintiff to have it represent him in the Sousa lawsuit and that this was done so that the plaintiff could over-bill its clients. As stated by one Superior Court judge, “the solicitation of a client is more apt to involve the entrepreneurial, as opposed to the representational, aspects of a legal practice because such an activity more often involves conduct occurring before the creation of the attorney-client relationship.” (Emphasis in original.) Tracey v. Still, Superior Court, judicial district ofAnsonia-, Milford at Derby, Docket No. CV 054001883 (March 23, 2006, Stevens, J) (41 Conn. L. Rptr. 101, ‘ 104); see also Anderson v. Schoenhorn, 89 Conn. App. 666, 674,874 A.2d 798 (2005) (stating that “the conduct of a law firm in obtaining business and negotiating fee contracts does fall within the ambit of entrepreneurial activities”).

The allegations of count nine also directly implicate the defendant’s billing practices in that the plaintiff alleges that the defendant over-billed as a result of its representation of multiple clients in the Sousa lawsuit. Cf. Proskauer Rose, LLP v. Lindholm, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 07 5005353 (May 19, 2008, Tobin, J) (45 Conn. L. Rptr. 503, 505) (striking CUTP A counterclaim because of the defendant’s failure “to allege any wrongdoing on the plaintiffs part other than over-billing. There are no claims that the plaintiffs bill, for example, included time incurred in working for other clients …. Without such allegations claims of over-billing necessarily involve only the professional judgment of the plaintiff as to how to staff the defendant’s case ….”). Consequently, although it is a close call, the court finds that the plaintiff alleges enough facts regarding the solicitation of clients and billing practices to arguably place this matter within the entrepreneurial exception to the CUTP A immunity afforded to attorneys.

Additionally, the defendant argues that count nine is legally insufficient because the plaintiff fails to allege causation. In its memorandum of law, the defendant argues that there are no facts alleged indicating that the defendant’s actions were the proximate cause of the plaintiffs injuries. In response, the plaintiff argues that he alleges sufficient facts in the amended complaint to establish the causation element because he alleges that he suffered injury “as a result” of the defendant’s conduct.

CUTP A provides in relevant part that: “Any person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a method, act or practice prohibited by section 42-110b, may bring an action in the judicial district in which the plaintiff or defendant resides or has his principal place of business or is doing business, to recover actual damages ….” General Statutes § 42-110g (a). “Our courts have interpreted § 42-110g (a) to allow recovery only when the party seeking to recover damages meets the following two requirements: First, he must establish that the conduct at issue constitutes an unfair or deceptive trade practice .. . . Second, he must present evidence providing the court with a basis for a reasonable estimate of the damages suffered …. Thus, in order to prevail in a CUTPA action, a plaintiff must establish both that the defendant has engaged in a prohibited act and that, ‘as a result of this act, the plaintiff suffered an injury. The language ‘as a result of requires a showing that the prohibited act was the proximate cause of a harm to the plaintiff.” (Citations omitted; emphasis in original; internal quotation marks omitted.) Scrivani v. Vallombroso, 99 Conn. App. 645, 651-52,916 A.2d 827, cert. denied, 282 Conn. 904, 920 A.2d 309 (2007).

In paragraph thirty-seven of count nine, the plaintiff alleges that he “has suffered damages as a result of [the defendant’s] conduct, including but not limited to damage to his professional reputation, loss of prospective economic advantage, loss of future earnings, and diminished value in the professional marketplace.” With this allegation, it can be seen that the plaintiff alleges that he suffered specific damages “as a result” of the defendant’s acts that are prohibited under CUTP A. The “as a result of” phrasing tracks the language of§ 42-1 10g (a) and that used by the Appellate Court in Scrivani. At the motion to strike stage, the plaintiff need only allege causation in order to have a legally sufficient cause of action. The plaintiff here alleges that he suffered specific harm “as a result of’ the defendant’s alleged violation of CUTPA; that sufficiently alleges the causation element. See, e.g. Myers v. Ocean Trace Development, Superior Court, judicial district of Fairfield, Docket No. CV 00 0375476 (May 3, 2002, Gallagher, J.) (stating that the plaintiffs “adequately allege causation by alleging that [they] suffered damages ‘as a result’ of the defendants’ recklessness”). Accordingly, this court denies the defendant’s motion to strike count nine.

FOOTNOTES

1.   As Heidell, Pittoni, Murphy & Bach, LLP is the only defendant that is a party to the motion to strike that is presently before the court, it alone will be referred to as “the defendant” is this memorandum.

2.  After the plaintiff filed the request for leave to file this amended complaint, the defendant filed an objection. This objection was overruled by the court, Jennings,      JTR., on September 22, 2010. Another defendant in this case later filed a request to revise this amended complaint, to which the plaintiff filed an objection. All of the plaintiffs objections were sustained by the court, Karazin, JTR., on October 14, 2010.

3.  The various counts will be addressed in the order that they are raised in the defendant’s two memoranda of law in support of its motions to strike, even though this is not the numerical order set forth in the amended complaint.