I have been writing on this blog about how Dallas County juries have shifted over the years from pro-defense to pro-plaintiff, or at least to a point where most prospective jurors in Dallas County don’t necessarily consider lawsuits a bad thing.  In the era of tort reform, this attitude among prospective jurors in Dallas County is very interesting.  My previous posts are here, here, and here.

But why do we care about juries anyway?  There are the constitutional reasons, and the traditions in our legal system that are tied inextricably to the jury trial process.  There are the defenders of the jury trial as the last line of defense against oppression.  And these are good reasons to care about the juries.

But my focus on why juries matter is more practical.  In Texas, juries matter because once a jury renders a verdict it is extraordinarily rare for the jury’s verdict to be overturned.  It happens, but not very often.  This is because legal and factual sufficiency challenges to a jury verdict are judged against very high standards.

The Dallas Court of Appeals just released a decision in Adams v. Bellas affirming a jury verdict where the court went through the standards for legal and factual sufficiency challenges to a jury verdict.

To overturn a jury verdict on legal sufficiency grounds, the court must first credit any evidence favoring the jury verdict if reasonable jurors could disregard contrary evidence if reasonable jurors could not.  If more than a scintilla of evidence supports the jury’s verdict, then the court has to uphold the verdict.  There is no weighing of the evidence on one side or the other.  The court simply looks at whether there is some evidence that would “enable reasonable and fair-minded people to reach the verdict under review.”

To overturn a jury verdict on factual sufficiency grounds, the jury’s verdict must be against the great weigh and preponderance of the evidence.  This means that the jury verdict will be set aside “only if it is so contrary to the overwhelming weigh of the evidence as to be clearly wrong and manifestly unjust.”

Taken together, the high standards for legal and factual sufficiency protect the philosophical value that we place on the role of the jury in our legal system. We have assigned the jury the role of weighing the evidence and resolving any conflicts or inconsistencies in the evidence.  We then shield the jury’s verdict from second-guessing by creating high standards for overturning the jury’s verdict.

So why do juries matter?  Because under our system, once the jury delivers its verdict it is procedurally and practically very difficult to overturn the verdict.  Oh, and also for all those constitutional reasons and tightly-held traditions long associated with our legal system.

Late last month a federal judge in Texas issued a nationwide injunction against implementation of the Obama Administration’s new overtime rules under the Fair Labor Standards Act.  The new rules were supposed to go into effect on December 1, 2016, and would have resulted in substantially more employees becoming eligible for overtime under the FLSA.  Recently the United States Court of Appeals for the Fifth Circuit declined to interfere with the trial court’s injunction.

I previously wrote about the new rules here.  The new rules would have raised the salary threshold for the professional, administrative, and executive exemptions from $455 per week to $913 per week ($47,476 annually).  The new threshold would have been indexed so that it likely would have gone up every three years.  In my prior post, I speculated that the Texas federal judge would not enter an injunction.  I got that part wrong.

For six months I have been working with clients to evaluate how best to approach the new overtime rules.  The problem was that some positions at some workplaces have been entrenched for years. Some decided to redefine job positions with new responsibilities.  Others decided to accept the new rules and prepare for paying employees by the hour who previously were paid a weekly salary.  Some were unsure of how to proceed.  Even with the injunction in place, there is uncertainty about what will happen next.

The injunction does not invalidate the Obama Administration’s overtime rules.  It merely puts a hold on the implementation of the new overtime rules until the court reaches a final decision on the legality of the new rules.  The court has requested briefing on the issue and could render a final decision as early as January 2017.  If the court concludes that the Obama Administration acted appropriately in formulating the new overtime rules, then the effective date of the new overtime rules could roll back to December 1, 2016.  Yikes.  This would result in reclassification of employees as exempt or nonexempt, and make the classification retroactive to December 1, 2016.  Employees reclassified as nonexempt could be entitled to overtime dating back to December 1, 2016. Double yikes.

And also in January, the new administration takes over and Congress is back in session.  With Republicans occupying the White House and having the majority the House of Representatives and the Senate, Congress or the new administration could step in to make changes to the new overtime rules.  Given the rhetoric of the election season, I don’t know where the new overtime rules are on the Republicans’ list of things to undo from Obama’s Administration.

So we will watch and see if the Texas federal judge issues a final ruling. Or whether the new administration and Congress steps in to act. Stay tuned…

Contracts are important and “the devil is in the details.” Too often I see business owners and experienced entrepreneurs come to me as first time clients with a serious problem. But when we go to review the contract that is at the heart of the issue, I often find that the contract was not professionally drafted, does not address many issues that should have been addressed or simply does not make sense in the context of the transaction.

Unfortunately, once a problem arises, it is almost always after the ink is dry and the writing is on the wall so to speak. In short, you’re stuck trying to enforce, or defending against, a contract that simply does not say what your new client thought that it said.

I recently had a new client come to me with a problem. He had invested hundreds of thousands of dollars into the purchase of a business. This client is an experienced entrepreneur with numerous successful business ventures. However, he did not have an attorney review the purchase documents prior to closing. The client sheepishly admitted that it was because he thought he would save himself some money in legal fees. In short, after the deal closed, the client learned that the business he had purchased was not worth even close to what he had invested in it.

While not a handshake deal, my client had trusted the people that he was dealing with to be forthcoming and truthful. Unfortunately, that was simply not the case. To add insult to injury, the contract documents were extremely vague and one sided in favor of the seller—not my client.

In this situation, if the client had invested roughly $3,000-5,000.00 in legal fees on the front end, it could have saved him hundreds of thousands of dollars. Unfortunately, this client’s story is not unique. Many investors and entrepreneurs avoid hiring an attorney to review their agreements related to their business transactions to save time and money. Similarly, many businesses are working with old outdated contracts.

If you are entering into a new business venture, or contract of any kind, have an attorney review the documents. A small investment now may save you a great deal of time, money and heartache later.

I recently had a trial that caused me to think long and hard about what is the best evidence at trial.  I concluded that documents, photos and videos beat witness testimony hands down. I believe that a case built around documentary evidence is stronger than a case build on witness testimony.

I think the reason is simple.  With documentary evidence, jurors can look at documents and form their own opinions about what the documents say and mean.  Jurors are savvy enough nowadays to suspect that the lawyers in the case will try to bamboozle the jurors into concluding that the documents say something that the documents don’t say.  If the jurors’ conclusions about the documents are consistent with the trial lawyer’s arguments, the jurors will form other conclusions consistent with the trial lawyer’s argument.  If the jurors’ conclusions about the documents conflict with the trial lawyer’s arguments, then the jurors will conclude that the lawyer is trying to trick them and they will be suspicious of the lawyer for the rest of the trial. I believe that jurors form conclusions about the documents, photos, and videos in the case, and then evaluate the witnesses and lawyers against those conclusions.

Witness testimony is inherently unreliable.  Countless studies show that two witnesses can view the exact same incident and come away with two different versions of what happened.  Jurors already know this.  Neither witness is lying, but unlike documentary evidence that does not change, inconsistency in witness testimony means that the jurors will have to decide which witnesses’ testimony is consistent with the jurors’ own perceptions of what happened.  Also, witnesses are subject to cross examination.  If the jurors trust the lawyer, then an effective cross examination can be brutal.  If the jurors do not trust the lawyer, then cross examination can generate juror sympathy for the witness.  Witness testimony comes to the jurors through the questions and answers provided by the lawyers and the witnesses.  In the end jurors have to evaluate the witnesses’ testimony against other witnesses, the lawyers, and the jurors’ conclusions drawn directly from the documents.

Documents, photos and videos that are entered into evidence go back to the jury room and jurors are encouraged to review all the evidence during deliberations.  Live testimony depends on the ability of the jurors to recall what was said among several witnesses and at times several days ago.  Like everyone else, two jurors may not remember the testimony the same way, and now the jurors must resolve the their own  inconsistent memories.  I believe that instead of resolving these inconsistencies, jurors tend to focus on the documentary evidence that they have with them in the jury room.

So back to my recent trial.  In that case, there were emails that on their face were not good for my client’s case.  We knew that we could explain our side of the emails, and we had great witnesses to do just that.  The other side had witnesses who testified consistently with the emails.  After the trial the judge permitted us to talk to the jurors.  All 12 of the jurors told us that they liked our witnesses, but that the jurors felt that the emails told the story.  There was no mention of the other side’s witnesses.  Our witnesses were good, but not good enough to overcome the jurors’ conclusions about the emails.

What is the best evidence at trial?  Documents.  Jurors can touch them, look at them, and reach their own conclusions about them.

Under contract law, if one party to the contract materially breaches the contract, the other party is discharged or excused from further performance.  That’s clear enough.  The problem comes in when the parties argue whether the term that was breached was material.  The Fifth Court of Appeals in Dallas issued an opinion this week that offers some help.  If you want to make sure that a contractual term is material, then a good start is to say the term is material in the contract.

The case is GDL Masonry Supply, Inc. v. Jose Lopez and Rapid Masonry Supply, Inc., No. 05-15-01200-CV.  Rapid alleged that GDL breached a confidentiality provision in a settlement agreement, and that the breach discharged and excused Rapid from any further performance under the settlement agreement.  GDL did not dispute the breach, but argued instead that the confidentiality provision was not a material term in the settlement agreement. The court of appeals rejected GDL’s argument because the parties expressly stated in the settlement agreement that the confidentiality provision was a material term in the parties’ contract.  According to the court of appeals, “GDL provide[d] no legal support for its position that we should overlook the intent of the parties as expressed in the plain language of the agreement itself…[.]”

The court of appeals recognized that there could be situations where additional evidence could establish that provisions in a contract are material, even without “magic words.”  But the court of appeals clearly gave substantial, if not total, deference to the parties’ contract because the contract itself designated that the confidentiality provision was material.

When you are drafting a contract you will want to consider the potential impact of a breach of one of the provisions will have on the remainder of the contract.  If you conclude that a particular provision is important enough that a breach of that provision should excuse any future performance by the non-breaching party, then label the provision “material” and avoid having to justify the importance of the provision through extrinsic evidence.  In the world of contracts, nobody likes extrinsic evidence.

Traditionally, violations of post-employment restrictive covenants were based on former employees actively contacting customers or past co-workers in the real world, or setting up a new brick and mortar business doing the same thing within a confined mile radius. However, the advent of e-commerce and social media has blurred the lines of acceptable (or even legal) behavior in the competitive business environment. Routine activities on sites such as Facebook, LinkedIn and Twitter can now run afoul of past employment agreements. This is especially true in the last few years when social media has expanded from its namesake of socializing to more of a networking platform.

The use of social media communications as evidence in trial is nothing new. An opposing party in ongoing litigation will dig for whatever “dirt” it can find, but an ex-employer will rarely keep tabs on a former employee to uncover actionable behavior. Perhaps this is why people are less cautious in their post-employment actions. But this type of carelessness can be discovered quite easily with the click of a button. Facebook currently has over 1 billion users, LinkedIn is hovering around 400 million users, and Twitter is gaining speed at 300 million users. Consider the following post: “This new company I am working for is amazing…If anyone is looking for new opportunities, give me a call.” This could be damaging to a former employer if that poster is connected to a former co-worker though Facebook or LinkedIn. A seemingly innocent post could be: “Anyone aware of someone who would be interested in [xyz product] or [xyz service]?” A customer of the ex-employer could receive this message, thereby resulting in a possible non-compete violation.

The case law on this subject is still in its infancy, and we have yet to see how this body of law will shape up. As sites such as Facebook, LinkedIn and Twitter gain more members, courts could take divergent views on post-employment activity. One viewpoint would be that the far-reaching grasp of social media necessitates stringent legal boundaries. On the other hand, social media can become so ubiquitous in the future that its regulation would be futile, resulting in certain restrictive covenants becoming unenforceable. For the time being, it would be prudent for employers to make every effort to enforce these covenants by keeping a watchful eye on the extracurricular activities of former employees.

Why do courts seem to hate temporary injunctions?  By the very nature of the relief requested, the parties come to court with urgency for immediate action.  The trial judge has to find time on her docket for a hearing in a case that probably did not exist a week ago.  The parties scramble to conduct discovery on shortened deadlines, and present issues that may not be ready for judicial action yet.  Then there is the inevitable appeal by the losing side.  Temporary injunctions are expensive, time-consuming, but seem to be the new version of “your day in court.”

And procedural pitfalls abound.  The Fifth Court of Appeals at Dallas issued an opinion last week vacating a trial court’s temporary injunction because the trial court’s order failed to identify the irreparable harm that would result if the trial court did not issue the temporary injunction.  Liberty Fed. Sav. Bank v. 2908 Lovers Lane Enter., LLC, No. 05-16-00389-CV.  Specifically, the court took issue with the boiler plate statement that irreparable harm would occur with any indication of what the harm might be.

The case involved the plaintiffs attempts to stop a threatened foreclosure by obtaining a temporary injunction from the trial court, which the trial court granted.  The Fifth Court of Appeals dissolved the temporary injunction because the boiler plate language that  “Plaintiffs will suffer immediate and irreparable harm unless the Defendant is enjoined …” did not spell out the specific irreparable injury that the applicant would suffer absent the injunction.  The court ruled that the boilerplate language did not satisfy Tex. R. Civ. P. 683’s requirement that “[e]very order granting an injunction and every restraining order … shall be specific in terms[.]”

This Dallas Court of Appeals opinion is something to keep in the back of your mind when preparing the form of the temporary injunction that you want the trial judge to sign.  You also probably should keep it in mind when you are evaluating whether to seek interlocutory appellate review of a decision granting a temporary injunction.

 

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On December 1, 2016, the salary component of the three most popular exemptions under the overtime requirements of the Fair Labor Standards Act will go from $455  to $913 per week ($47,476 annually).  The immediate impact of this change is that if a company is not paying existing salaried employees at least $47,476 annually, then a whole lot of those salaried and previously exempt employees will now be eligible for overtime.   This includes managers and supervisors that were previously exempt under the professional, executive, or administrative exemptions in the FLSA.

Moreover, the salary component of the executive, professional, and administrative exemptions will be indexed, and will likely go up every three years.  Under the new rules, the salary level will be tied to the 40th percentile of weekly earnings for full-time salaried workers in the lowest-wage Census Region.  Currently, the lowest-wage Census Region is the South.

Mark Tabakman recently reported that two lawsuits have been filed in the United States District Court for Eastern District of Texas challenging the new rules.  The plaintiffs in the lawsuits are state and local governments, business groups, and chambers of commerce, and challenge the Department of Labor’s authority to raise the salary level under the FLSA exemptions.  Mark projects that the lawsuits will be unsuccessful.  I tend to agree.

As we approach December 1, 2016, employers need to examine those employees in salaried positions.  Just because an employee is paid a salary does not mean that the employee is exempt from overtime.  However, in most cases before an employee can be considered exempt from the overtime requirements, the employee must be paid a salary of at least $913 per week.  If the salary threshold is not met, it does not make any difference what the employee’s duties and responsibilities are.