Steven Callahan

Noncompetes in the Crosshairs: It was only a brief delay in the Texas federal court (5 weeks or so) before the judge made a ruling that put a halt to the September 4 effective date of the FTC Noncompete ban. The judge ruled that the ban was beyond the statutory mandate for the FTC under the FTC Act. It has been remarkable how many folks have heard about this FTC ban and presumed that noncompetes are dead. Not so fast! Sooner or later this will hit the appellate courts who will decide it. Given the recent trends in the Supreme Court it seems like only a matter of time before this ban is struck down. If that happens it will be up to Congress and the President to change that law or for states to decide on the legality of noncompetes within their borders.

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Federal Judge Ada Brown issued a permanent, nationwide injunction blocking the FTC's nationwide ban of non-compete agreements. Judge Brown ruled that the FTC's one-size-fits-all ban exceeded its authority. Non-compete agreements can be useful in protecting a business' competitive edge (think: trade secrets, discount schedules, etc.). In Texas, for a non-compete to be enforceable, it must be (1) "ancillary to or part of an otherwise enforceable agreement" (meaning, you can't slap a non-compete on an employee just cuz you wanna), AND it must (2) contain REASONABLE limitations as to time (how long will the restriction last?), geographical area (where can the employee not compete?), and scope of activity to be restrained (think: what do you need to protect; because you simply cannot keep someone from earning a living) "that ... do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the [employer]." (hat tip: Texas Business & Commerce Code, Sec. 15.50). https://lnkd.in/gHkZyG4s

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FTC Non-Compete Rule Update - A Texas federal court has delayed the FTC’s non-compete rule for a few parties, with a final ruling expected by August 30. Another challenge may lead to a nationwide injunction. Employers should continue contingency planning. More updates will follow. #FTC #NonCompete #LegalUpdate #EmploymentLaw #BergerSingerman

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Don't Get Caught Off Guard: New Amendment Requires Expert Challenges 60 Days Before Trial In a significant shift for Louisiana litigators, the 2024 legislative amendment to Article 1425(F) of the Louisiana Code of Civil Procedure now requires that any challenges to an expert's qualifications or methodologies be filed at least sixty days before trial. This change encourages thorough preparation and early resolution of potential disputes, allowing all parties—and the court—ample time to consider the validity of expert testimony before trial. In this article, Zachary Howser outlines how this amendment aims to streamline judicial proceedings and enhance the fairness of the process. https://lnkd.in/gUqdU3Qq

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The district court in the Northern District of Texas wrote, "No federal law *broadly* addresses the enforceability of non-competes." I think "specifically" would have been a better word choice for what she meant. At least as long as the Sherman Act has been in effect, parties have argued what constitutes an illegal contract based on a "restraint on trade." I think the key question is really whether the FTC has authority under the broad language of its enabling statute to create a new rule banning almost all noncompetes as a category. That's what seems obviously suspect to me, and I don't see how the FTC will argue to conservative appellate courts that it did enough to justify the broad scope of its non-compete ban rule. Reading tea leaves is not usually a good idea in litigation, but I don't see the FTC going very far with this case. #FTC #Noncompetes #Texas

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New NV Supreme Court Case Crim Inventory Search with investigatory motive is not necessarily unconstitutional. Full Opinion: https://lnkd.in/g_jH_5UD "while an inventory search cannot be a ruse for general rummaging, an investigatory motive does not necessarily invalidate an inventory search so long as the search that occurred is the same as the inventory-based search that would have happened absent any such motivation and the circumstances leading to the search were not created as a ruse to establish a basis for that search. Instead, a court deciding a suppression motion must determine the search's reasonableness under the totality of the circumstances by evaluating (1) the extent to which law enforcement departed from the standardized procedures, (2) whether the scope of the search was as expected in light of the underlying justifications for inventory searches, and (3) whether the inventory produced served the purposes of an inventory search.

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💼 Are Recorded Depositions without a Stenographer Worth Considering? Here’s What Texas Litigators Need to Know. Our latest blog tackles an area of misunderstanding in Texas litigation: non-stenographic depositions. Whether you’re skeptical or just curious, here's some info and actionable insights you need: ✔️ Texas deposition rules and the truth about recording flexibility ✔️ Key differences between non-stenographic options and traditional stenography ✔️ How understanding these choices can empower your practice From tight budgets to tight deadlines, discover how non-stenographic methods can help you deliver top results for your clients. Get informed and get an advantage. https://lnkd.in/eRtrsCdN #TexasLaw #Litigation #Depositions #legaltech

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Thanks Bloomberg Law for including my thoughts in this piece. https://lnkd.in/g3c7_3tz

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BREAKING NEWS: Judge Tigar grants plaintiffs in Doe 1 v. Github leave to file interlocutory appeal to Ninth Circuit on whether DMCA CMI claims under Section 1202 are limited to identical copies of the plaintiffs works. Opinion in link below: https://lnkd.in/gXYsEvYY Part of the reason: "To this Court’s knowledge no court of appeal has ruled on this issue, and district courts have reached differing conclusions. See, e.g., Anderson v. Stability AI Ltd., No. 23-cv-00201-WHO, 2024 WL 3823234, at *8 (N.D. Cal. Aug. 12, 2024) (finding DMCA Section 1202(b) claims have an identicality requirement); Beijing Meishe Network Tech. Co., Ltd., v. TikTok Inc., No. 23-cv-06012-SI, 2024 WL 3522196, at *9 (N.D. Cal. July 23, 2024) (declining to dismiss on identicality grounds); ADR Int’l Ltd. v. Inst. for Supply Mgmt. Inc., 667 F. Supp. 3d 411, 427 (S.D. Tex. 2023) (“Based on the plain wording of the statute, the Court is not persuaded that the DMCA includes an ‘identical copy’ requirement.”); Kirk Kara Corp v. W. Stone & Metal Corp., No. CV 20-1931-DMG (Ex), 2020 WL 5991503 (C.D. Cal. Aug. 14, 2020) (adopting an “identicality” standard); Oracle Int’l Corp. v. Rimini St., Inc., No. 2:14-cv-01699-MMD-DJA, 2023 WL 4706127, at *82 (D. Nev. July 24, 2023) (“The Court also rejects Rimini’s argument . . . that a work that removes copyright management information must be an exact copy of the original work. This construction of the DMCA would weaken the statute’s intended protections for copy right holders.”). “One of the best indications that there are substantial grounds for disagreement on a question of law is that other courts have, in fact, disagreed.” Rollins v. Dignity Health, No. 13-cv-01450-TEH, 2014 WL 6693891, at *3 (N.D. Cal. Nov. 26, 2014). Given this split in authority the Court finds there are substantial grounds for disagreement on this issue."

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Update, to my point on number 1 below, the E.D.Tex. judge has stayed the Chamber's lawsuit, deferring to the first filed Ryan lawsuit, so the N.D.Tex. now has the conn. Semi Rando Friday Morning Thoughts Re FTC Noncompete Ban 1.        The Chamber’s lawsuit in E.D.Tex. and Ryan LLC’s lawsuit in N.D.Tex. appear to be moving in apposition, rather than concordance (Prince of Tides reference); 2.        It still seems likely that a stay, or something like it, will come from one of these lawsuits, or perhaps the one in Pennsylvania; 3.        But employers need these parties to stay focused on the big picture and work together in the sense that they share a common interest, along with every other employer in the country that would like to continue using noncompetes; 4.        Effective date of the rule, absent a stay, is approximately September 7 – and perhaps that means the drop dead date for companies to get serious about planning is August 1 or so; 5.        Regarding that planning, keep in mind that even the FTC concedes, for now, that a provision that is not a “post employment restriction” is also not a “non-compete clause” under its definition; 6.        This leaves a crack of light even if the rule becomes effective.  Ideas that are in play include garden leave provisions, severances that extend employment, and – really crawling out of the box here – how about dispensing with employment at will altogether and limiting the parties’ right to terminate the relationship to “cause” and “good reason?”  7.        I’ll leave that half-baked thought there with one last question – is employment at will really that valuable in the context of employees who control massive books of business or walk the hallowed halls of the C Suite? 8.        I look forward to discussing these and other issues with my smarter-than-me colleagues Tobias E. Schlueter and Christine Bestor Townsend during our webinar on May 9. https://lnkd.in/ghdyQccb #futureproofing #noncompeteskynotfalling

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The Importance of Written Mediation Settlement Agreements In Missouri, it’s not just a good practice to reduce a mediation settlement agreement to writing, it’s required if the parties want the agreement to be enforceable. Supreme Court Rule 17 is clear: oral settlement agreements from court-ordered mediation aren't enforceable unless they're put in writing. See, Williams v. Kansas City Title Loan Co., Inc., 314 S.W.3d 868 (Mo.Ct.App. 2010).  Missouri courts will not enforce oral agreements from mediations. Kansas doesn't have an explicit rule like Missouri's that requires mediation agreements to be in writing. But it’s still the best practice. Mediators should reduce at least a summary agreement to writing. While most mediators ask the parties to sign a settlement agreement, this is more challenging with online mediations. The mediator and the parties need the technical expertise to draft, distribute, and get signatures on a .pdf or other document setting forth the terms of the settlement. My practice is to send the parties information about the technology that will be used in an online mediation so that those issues can be resolved ahead of time. Ethical Concerns From an ethical and practical standpoint, making sure everyone understands the deal is key. The Kansas Rules of Professional Conduct and similar rules in Missouri encourage mediators and lawyers to avoid misunderstandings and make sure all parties are clear on the settlement terms. Practical Reasons to Write It Down Beyond the legal and ethical rules, there are strong practical reasons to document mediation agreements: Clarity: Written agreements help everyone understand the key settlement terms. This helps avoid misunderstandings or different interpretations of what was agreed to in mediation. Finality: A written document shows which terms of the agreement are final and no longer negotiable. It confirms the dispute is resolved. Although most parties draft a more comprehensive agreement post-mediation, the signed agreement at mediation will lock down the key terms such as payment, confidentiality, assessment of costs, etc. Enforcement: It's easier to enforce a written settlement in court. The parties avoid any ambiguity about which of the parties' statements are part of the settlement agreement. Professional Standards: For legal professionals, upholding high practice standards is essential. Written agreements are a best practice. The Bottom Line Regardless of the rules, the best practice is to reduce the agreement to writing. From legal enforceability to ethical considerations and practical benefits, there are compelling reasons to put a mediation settlement in writing. When the mediating parties believe they have settled their case, they should be confident the settlement will stick. If you’d like to book a mediation, click the “Book an Appointment” link in my profile. #Mediation #Ethics #SageMediationSolutions #MSBLaw

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Starting tomorrow, July 1, Texas - the second largest US state (in population, area and GDP) - will have and enforce a general privacy law. No longer is it just "California and several smaller states" - Texas is a heavy hitting addition to the "state privacy law" column. Our Goodwin privacy/cyber team covers it here, w Jacqueline Klosek, Federica De Santis, Gabe Maldoff, Dena Kia, Jud Welle, Mark David McPherson, Kyle Tayman. https://lnkd.in/eknZunD5 *** Attorney General Ken Paxton is already doubling down on enforcement, announcing a special new taskforce and warning companies that any violations "will be met with the full force of the law" and that "I am doubling down to protect privacy rights.” Message heard loud and clear! https://lnkd.in/ef35gevG *** Indeed, the Texas AG has already emerged as a leading enforcer of privacy laws, bringing actions under the state's biometric privacy statute (CUBI) as well as the data broker legislation. See here about the recent enforcement sweep, including letters sent to 100 data brokers: https://lnkd.in/eR8jBnHy

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The Texas Lateral Market Report is out now. There were twenty partner and counsel moves in September. For more insights into the Texas lateral market, reach out to Saadia Sultan. https://bit.ly/4fgfGcG #themccormickgroup #legal #lateralhiring

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The Texas Lawbook has published my take on the Supreme Court's important decision in the Purdue Pharma case on non-consensual third party releases. You can read it at the link below. #bankruptcy #SCOTUS

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Important Update re: Noncompetes! This court ruling continues the uncertainty re: the enforceability of noncompetition agreements, but it removes the immediate time pressure created by the FTC rule that would have required notices to all employees and former employees.

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BREAKING NEWS: Latest status report on copyright lawsuits v AI companies. 📰 4 new lawsuits = 24 total lawsuits May 8 hybrid hearing on MTD in Andersen v Stability AI: you can attend via Zoom 🏎️ Link in article below 👇🏽 Judge Tigar cancels hearing on MTD in Doe 1 v Microsoft. Who does that favor?

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