Greene’s Jewelry Wholesale, Llc

memorandum

ISSUES PRESENTED:        

1. Does Greene’s Jewelry Wholesale have a legitimate case against a former employee for breach of the confidentiality agreement said former employee signed?  

1. What protection does Greene’s Jewelry Wholesale have against a wrongful termination claim against them?

SHORT ANSWERS:

1. Yes, Greene’s does have grounds to file suit against the employee for breach of the confidentiality agreement signed.  Greene’s can show that the decision to terminate some of its staff was just and warranted.

1. Yes, Greene’s does have protection given the weak evidence supporting the claim against them.

STATEMENT OF FACTS:

Greene’s Jewelry Wholesale, LLC is a manufacturing and distribution company selling high end costume jewelry.  Started in 1957, their main headquarters are located in Derry, New Hampshire and it is owned by Mary Jane and Allen Greene.  The company’s main asset, “Ever-Gold”, is its patented process for creating a synthetic gold colored material which is used in Greene’s costume jewelry.  This material is impermeable to scratches, discoloration, and oxidization.

 The Greene’s, have reached out to our firm requesting consultation regarding some issues with a former employee, Jennifer Lawson.  Ms. Lawson’s role with Greene’s was a Junior Executive Secretary in the Research and Development Department.  She is described by our clients, for the most part, as a quality employee.  She is considered to be professional, articulate, diligent, and skilled in her role with the company.  Ms. Lawson does however have a problem with promptness, as she routinely arrives late to work.  Ms. Lawson was informed Greene’s that she was pregnant and the pregnancy would require her to take additional time off as there were high risk factors involved.  Greene’s Head of Human Resources informed her that additional time off would not be necessary as the company had decided to downsize and let go of all Junior Executive Secretaries.  After her termination, Ms. Lawson realizes she took a draft letter detailing the production process for “Ever-Gold”.  While all executives of Greene’s are required to sign non-compete and confidentiality agreements, Ms. Lawson’s was only required to sign the latter.  Needing a job, she contacts Greene’s main competitor, Howell Jewelry World.  Howell offered Ms. Lawson a position which was contingent on her turning over the draft letter of the “Ever-Gold” production process.  After only one week of employment with Howell, Ms. Lawson is fired for an issue she had while at Greene’s, tardiness.  

The two issues are as follows:  

First, Greene’s is seeking to file a lawsuit against Ms. Lawson for breaching the confidentiality agreement she signed at the time she was hired.  The stipulations of Ms. Lawson’s contract stated that there were no conditions keeping her from working from any of Greene’s competitors.  However, she did in fact sign a confidentiality agreement keeping her from disclosing any of Greene’s company secrets.    

The second issue is the timing of Ms. Lawson’s termination from Greene’s.  Ms. Lawson is claiming that she was terminated from her position due to her being pregnant.  Greene’s claims that they were in the process of downsizing their company and would no longer have a need for specific members of their staff.  

DISCUSSION:

In regards to Greene’s case against Ms. Lawson, Ms. Lawson knowingly and intentionally shared confidential information with one Greene’s competitors.  Under New Hampshire law, "misappropriation” refers to the acquisition of a trade secret by someone who knows or has reason to know that the trade secret was acquired by improper means -- theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy. It also includes the disclosure or use of a trade secret without consent by someone who used improper means to acquire knowledge of the trade secret - for example, an ex-employee who spills company secrets to a rival (Stim, New Hampshire Trade Secret Law).  Because a confidentiality agreement between Ms. Lawson and Greene’s was in place, it is reasonable to expect that Greene’s interests should be protected from parties outside that agreement.  Keeping this information confidential in in no way has any effect on the day to day lives of Ms. Lawson or the public in general.  The agreement between Greene’s and Ms. Lawson was, and is in fact reasonable.  

A similar case involving a breach of a non-disclosure agreement shows there is precedent that supports Greene’s case.  In Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC, Lauren Brenner (Plaintiff) set out to open her own fitness studio based on military boot camp training.  After two of her instructors, Alexander Fell and Ruben Belliard (Defendants) were terminated, they had opened a fitness studio with the same theme.  Plaintiffs contend that both Belliard and Fell breached their Employment Agreements: (1) by failing to devote their skill and best efforts to Pure Power, and by disparaging and undermining the reputation of Pure Power; (2) by disclosing confidential and commercially sensitive information; (3) by using Pure Power Intellectual Property (as defined in the Employment Agreement) in a competing business; (4) by competing directly with Pure Power within ten years of being employed by Pure Power; and (5) by soliciting Pure Power's customers (Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC).  Ultimately, the court found in favor of the plaintiff.  Concluding that the defendants violated the agreement to which they were bound to.  The court awarded substantial monetary relief to the plaintiff.

        Ms. Lawson has filed a case against Greene’s saying that her position was wrongfully terminated.  The foundation of her claims center around disparate treatment.  It is not clear that Ms. Lawson has any direct evidence that Greene’s was motivated to act with discriminatory intent towards Ms. Lawson specifically.  Given the timing of the dismissal, it may appear that that Ms. Lawson has a valid discrimination case against our client.  Greene’s claims the reasoning for the dismissal had nothing to do with her personal situation, but out of necessity from their intentions to downsize.  Further discovery will need to be done on our part to ensure that internal discussions regarding downsizing took place prior to Ms. Lawson notifying Greene’s of her pregnancy.  Greene’s must show that it was in no way were they motivated to terminate Ms. Lawson based on her pregnancy.  There is case law supporting Greene’s in Megivern v. Glacier Hills.  An employee had claimed discrimination due to her pregnancy.  However, Glacier Hills successfully defended itself by citing a history of job poor performance.  The only evidence that weighed in her favor was the temporal proximity of her dismissal to the announcement of her pregnancy, but this evidence alone was insufficient to warrant a finding of pretext (Taimi Megivern, Plaintiff-Appellant, v. Glacier Hills Incorporated, Defendant-Appellee).  Megivern was unable to successfully show that there was a connection between her termination and her pregnancy.  In Ms. Lawson’s case, while there is some merit to her case, her argument should fail.  She does not have enough evidence to support her claim of discrimination.  As stated before, although the timing is suspect, that alone is not enough to prove Greene’s acted with malicious intent against Ms. Lawson.  Furthermore, Ms. Lawson’s and her position were terminated.  At no point did Greene’s ever make any attempt to hire a new employee to fill the role vacated by Ms. Lawson.  

        Conversely, in Monge v. Rubber Co., 114 N.H. 130, 132 (1974), alleged that she was harassed by her supervisor and a personnel manager and was subsequently fired after an absence from work for a legitimate illness (Monge v. Rubber Co., 1974).  While, this case was remanded, the trial jury did in fact find in favor of the plaintiff.  Similar to Ms. Lawson, Monge’s case is based on a theory.  Here, Monge was terminated for refusing a superiors advances; and Ms. Lawson for being pregnant.

APPLICATION OF LAW TO THE FACTS:

        In this case, the validity of Mary Jane and Allen Greene’s claim for breach of the confidentiality agreement depends upon (1) determining whether Jennifer Lawson knew that the her use of the patented process for creating Ever-Gold was malicious and in violation of the signed confidentiality agreement, and (2) Ms. Lawson used the Greene’s patented process without their consent, thus voiding the confidentiality agreement.  As for the claim of wrongful termination on Ms. Lawson’s behalf, the validity of that claim depends upon (1) if there is direct evidence that the termination was predicated on discriminatory reasons, and (2) if this evidence is in fact circumstantial.  The basis for Ms. Lawson’s claim is that she was terminated due to her pregnancy and the additional time off needed because of the complications involved.

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