“Death Truck” Retaliation Looms over $238 Million Retaliation Verdict
October brings changing leaves and spooky stories, and few phrases scare employers more than “$238 million jury verdict.” The spooked employer in this story is UPS: a Washington jury found the package-delivery company liable for $39.6 million for a former employee’s emotional distress and another $198 million in punitive damages. At trial, UPS insisted it had done nothing wrong. The company said it had terminated the plaintiff—Tahvio Gratton—after investigating him for workplace misconduct.
Gratton’s story, of course, was far different. His trial team told the jury that Gratton had reported discrimination years before his termination and that a long campaign of UPS retaliation followed. A coworker testified at trial that Gratton was assigned routes that were “overloaded” and that the routes included stops that were “completely out of his way,” “70, 80 blocks away from where he would normally be.” Gratton also contended—eerily—that his supervisors had punished him by assigning him to what was known as the “death truck,” a vehicle detested by drivers because it lacked expected features: no automatic transmission, no heater, no back-up camera, no working fuel gauge.
As seasoned HR professionals know, retaliation claims are increasingly common. While the number of sex- and race-discrimination EEOC charges has held relatively steady for 25 years, retaliation charges have more than doubled over that same time. There may be more twists to come in the UPS–Gratton suit, including through a UPS motion asking the court to toss the punitive-damages award, which remains in play. No matter what comes next, though, employers must remain cautious when handling termination decisions, particularly when (as here) those decisions come after years of manager–subordinate in-fighting.
Hiring Managers Double-Take as Jury Slams Employer for Poaching, While NLRB Threatens Employers for Not Poaching
Hiring has been a challenge for employers for the past several years. After a pandemic-induced spike, unemployment has stayed low—hovering around 4%. And many employers are overworked trying to find and retain top-flight employees. In a squeezed market, hiring requires a careful balance, as a pair of recent cases illustrate.
In late September, a federal jury trial in Massachusetts ended with a $25 million poaching verdict in favor of a cosmetic-treatment company called Cynosure. Cynosure's suit targeted competitor Reveal Laser as well as more than two dozen former Cynosure employees. Those employees (including executives, sales managers, and territory managers) resigned en masse from Cynosure. Months later, Reveal Laser announced that it had hired them all. That employee exodus appeared to have been led by what Cynosure called “disloyal insiders”—two former executives who resigned without warning.
While the case involved allegations of trade-secret misappropriation and customer tampering, the multimillion-dollar verdict didn’t rely on those theories. It relied, instead, on claims that Reveal Laser had interfered with Cynosure’s employee relationships and that the lead executives had breached their contractual and fiduciary duties by drawing employees away after them. In the end, the jury tagged Reveal Laser with a $15 million penalty and the two “pied piper” executives with $5 million apiece.
Employers frightened by poaching verdicts may be tempted to protect themselves by setting hiring ground rules in partner agreements. But that, too, is risky (and not only because of potential antitrust concerns). In mid-September, the NLRB issued a complaint against a New Jersey-based janitorial and building-maintenance company called Planned Companies, faulting Planned Companies for its attempts to stave off poaching. In what the NLRB believed was a blatant attempt to work around disfavored non-competition clauses, the New Jersey company had required its customers—buildings in ongoing need of cleaning and upkeep—to agree not to hire maintenance workers away from Planned Companies. That arrangement drew the NLRB’s attention because it “in effect interferes with employees’ ability to be rehired to do work in the building in which they are currently working.”
The Massachusetts verdict and New Jersey complaint leave employers stuck between a rock and a hard place (or, for employers favoring leather-bound books and rich mahogany, navigating the straits between Scylla and Charybdis): the only thing as dangerous as too much hiring may be too little hiring.
First Circuit Concludes, Politely, that “Sorry, I Moved to California!” is not a Legitimate Noncompete Defense
It’s a Hollywood trope: pack your things into the trunk of your car, move to L.A., and launch your career. It worked for Brad Pitt. It worked for John Hamm. This newsletter’s last update asks a less conventional question: Can an employee bound by restrictive covenants pack their pens and post-its, move to California, and relaunch their career in a competing gig?
The theory, of course, is that while California is famously hospitable to waiters-turned-movie stars, it is famously inhospitable to noncompete agreements. At least that’s what Michael Hermalyn was banking on. Hermalyn was a New Jersey-based major-account executive at DraftKings, a Massachusetts-based sports-betting company. Hermalyn bolted from DraftKings for a California-based rival hoping that the Golden State would provide some refuge from a lawsuit sure to trail him.
Hermalyn’s dreams were dashed when a district court enjoined him from competing against DraftKings anywhere in the United States. And in a charmingly breezy opinion issued in late September, a federal appeals court left that injunction in place, concluding that California’s public policy disfavoring non-competes “can’t override Massachusetts’s” favoring them. As the court put it, Hermalyn’s request for a “California carveout” would “give him a way to skirt the countrywide preliminary injunction’s one-year noncompete ban.”
Hermalyn built his arguments on bad facts. For example, Hermalyn’s search for competing work started days after he learned DraftKings was investigating him for workplace misconduct. And while he swore to the district court in an early declaration that he did not visit any of the rival’s offices before accepting its offer, he failed to disclose that he (gulp) weekended at the rival CEO’s house before leaving DraftKings, and that while there, he (double gulp) downloaded confidential DraftKings documents using the CEO’s network.
Hermalyn will spend the rest of the year on time out. And his case is a reminder to employers that even in an age of noncompete skepticism, the right facts can still support an attempt to enforce restrictive covenants—even if your employees pack their bags and head west.
