Lively v. Baldoni 9 - Lawyer MJ Morley Breaks Down the Law in Jones v. Abel

Transcript

This transcript was generated automatically and may contain errors — the audio is the record.

0:00:00 Lydia: I'm excited to announce that we have joined the Creator Accountability Network. CAN is a nonprofit dedicated to reducing harassment and abuse through ethical education and a system of restorative accountability. We joined because we care about the safety and well -being of our community members. If you feel our behavior or content has harmed someone, please report it to CAN, either via the reporting form on their website. Creatoraccountabilitynetwork .org or via their hotline at 617 -249 -4255. Help us make it right and avoid repeating that mistake in the future. Also needs volunteers from our communities to help with their work, so if you have skills you think would be helpful or time and a desire to help, please visit their website to find out how you can volunteer. Importantly, get the word out to other creators who you think will be interested in getting credentialed. Us build safer communities together.

0:01:11 Thomas: Hello and welcome to Gavel Gavel. This is episode 9 of Lively v. Baldoni. I'm Thomas. That over there is Lydia. How you doing?

0:01:19 Lydia: Hi, I am doing pretty well. Excited to get into the law on this part of the docket.

0:01:24 Thomas: So excited, but how are we going to do that? We're not lawyers.

0:01:28 Lydia: You're right. So I connected with MJ Morley, who's been covering this case on threads primarily at More with MJ. And she's going to hop on and dissect this lawsuit with us. The Stephanie Jones et al. v. Jennifer Abel et al.?

0:01:45 Thomas: This is a real treat because this is someone who is very qualified to talk about this. And as you'll hear, has some like absurdly relevant kind of experience and just like her connection to the story. Excited to have MJ on. Is going to be a lot of fun. I think this works out really well because, again, I mean, we have to spend so much time on the facts and these things. These complaints are so long that liking this approach. Like, yeah, I wish we had the ability to have a lawyer on all the time, but there's so much. Guys don't understand how much time we put into recording. It all edits down neatly, but we put hours into recording the factual going through the complaint part. For one, do not. Know of or want to try to pay any lawyers to sit in for that like it like it's I've paid enough of my money to lawyers in my life I think I'm kind of done with that so this is working out great and MJ couldn't be a better guest for this so I'm excited why don't we get going to take our usual break and you can avoid the ads by going to patreon .com slash gavel pod and you get the goodies. Some goodies there. There is a lot. So make sure to check those out and you support the show. And you get stuff early, by the way. You get episodes a lot earlier, especially when we release them in chunks. Like Patreon,

0:02:29 Lydia: Subject them to that. Yeah, the chunk method.

0:02:56 Thomas: It's a chunk system. It's the patented chunk system. There must be a better way. What happens is when we do the chunk system, we release that whole chunk on Patreon like at once. But then the normies, you know, we spread it out a bit. So I don't know why our method is so gross, but it just it's yeah, it's really.

0:03:10 Lydia: You get partial chunks as a normie. It's disgusting.

0:03:19 Thomas: Yeah, so all kinds of good reasons to be on Patreon .com slash Cavalpod. Thanks so much to our supporters. And after this break, we'll get on over with MJ.

0:03:33 Lydia: We are so excited to be joined today MJ Morley, who is based out of New York. And welcome to the show and happy to have you here to break this Stephanie Jones lawsuit down.

0:03:44 MJ: You so much, Lydia. I'm so excited to be here with you guys and have really enjoyed listening to your coverage so far.

0:03:49 Lydia: Well, thank you.

0:03:50 Thomas: That's so nice. We are thrilled to have you. Can't wait. Got to ask, how did you get into this? It's such a fascinating, weird case.

0:03:59 MJ: Of course. I think I have made this joke a few times to people that I might be the exact age that I watched, you know, Blake Lively and the Sisterhood of the Traveling Pants, but also got really into Jane the Virgin. So I was a fan of both of them. And I read the book around the time when it kind of blew up on the internet. I liked it. And I was kind of waiting for them.

0:04:21 Thomas: You're like the Forrest Gump of this story. You know, I love it.

0:04:27 MJ: It's weird how has happened. But I read the book. And then this summer, when the promotions were going on and everything was kind of happening, I said to my group chat with my college girlfriends, like, does anyone want to go see this movie? And the response is, I did.

0:04:43 Thomas: You literally bring your florals.

0:04:43 Lydia: You grabbed your girls. You grabbed you girls and

0:04:46 MJ: I tried.

0:04:46 Lydia: Your florals.

0:04:46 Thomas: What is happening? Wow.

0:04:48 MJ: Fully tried. I did. Right. Mom around boys all the time. I was looking for that. Let's go.

0:04:54 Thomas: All all the advertising companies for this had a picture of you on their wall. This is who we want. People get this exact person in the seats.

0:04:57 Lydia: Just MJ. Oh,

0:05:03 MJ: Well, funny it's because I actually found the book was more about, you So I liked that appeal. Anyways, the responses from the group were all over the place. And that's when I first started paying attention to the press coverage and how much hate Blake Lively was getting during that period.

0:05:22 Lydia: Interesting. So did you have like some of the friends in your group chat were like, I'm never going to see that movie because of, you know, Blake Lively sucks or like what were the responses that you were getting there?

0:05:33 MJ: Yes. And I wish, so I don't keep texts for longer than a certain amount of time, but I wish I did.

0:05:39 Lydia: You're such a lawyer.

0:05:40 MJ: It's such a lawyer thing.

0:05:41 Thomas: And I also we've been through enough to know that's very smart.

0:05:45 MJ: Yeah, as long as it's your ordinary course, right, then it's fine. But that is because of discovery, because of what I've learned and because of actually non -compete cases. So I'm happy that we're talking about this. Was all over the place. There was like, I have no interest. I'm not seeing that movie. You Lively is terrible. All the space.

0:06:05 MJ: And then I had a side chat with a friend, you how those happens out of group chats.

0:06:08 Thomas: Was like, can you believe these people?

0:06:10 MJ: She was like I can't believe Blake Lively is acting like this. This is... terrible to people who have experienced domestic abuse. I'm like, OK, what is going on here? Then I just started kind of following the story. And I I thought something was something more to it. And weird that I know the date. But on December 20th, that friend that I had the side chat with said, oh, you were right. You know, as a lawyer, I love being

0:06:19 Lydia: Yeah

0:06:33 Thomas: It's a shame we don't keep that. Oh, you were right, text, you know? Could have framed that one.

0:06:35 Lydia: Screenshot

0:06:38 MJ: Oh, I I did actually probably screenshot that one. You were right.

0:06:38 Lydia: That yeah oh nice

0:06:41 Thomas: This is going to be a bad document in discovery. No, I'm just kidding.

0:06:45 MJ: So started posting about it on threads because said, can you explain it to me? And when I did, she said you should explain it for other people. And that has grown into, you know, people following me to kind of read my analysis on it.

0:06:59 Lydia: Tens of thousands of people yeah a few people

0:06:59 Thomas: Awesome. Yeah. Of a kind of legal background, specifically?

0:07:04 MJ: So I one of those people that says I hate being a lawyer or I hated law school. I loved everything about law school, I love being a law school lawyer. I started at a really great firm that, felt like we were big law and we'd have cases against these big firms, you get really good experience right from the beginning. So I did non -competes on team of three. So it would be two partners and myself for about three years and nine So we do non -compete, high level employment issues, trade secrets. And that would be in New York state courts and then also in the federal courts. So in the Northern District as well as the Southern District where these are pending.

0:07:46 Thomas: Still Forrest Gump -ing it with perfect, relevant legal experience. This Is Crazy.

0:07:51 MJ: That same friend is like, were you born for this? And it's our, our funny joke right now.

0:07:54 Thomas: I think so.

0:07:57 MJ: Gets worse. I bought man enough for my husband. So yeah. Forrest Gump all the way. Yeah, I was a fan of both of them. So I wanted to follow the lawsuit and I, I have the experience to know what's happening kind of behind the scenes. Just kept following it.

0:08:00 Lydia: Man yeah before we get into like the particulars of this lawsuit that, Jones v. Abel, you mentioning a bit about what it's been like in social media while you've been covering this case. Can you chat a little bit about that? And yeah, yeah, probably really casual, you

0:08:28 Thomas: Super fun, I bet. And fun. Yeah.

0:08:34 MJ: It's been strange. And I'm almost hesitant to talk about it because some of the messages I've received have been, frankly, pretty scary. Heard that that has happened to creators, whether they are openly one side or not. I definitely tried to cover it from a neutral perspective. At first. And I think it's become clear that right now I lean towards Blake Lively. And this is based on the court filings. Like I'm not trying to read any PR. I'm trying to stay away from the media. That is just where I am. So I'm pretty open with that. And

0:09:10 Thomas: You're in a safe place here because those assholes do not have the attention span to listen to an entire podcast, I found. It's, uh, yeah.

0:09:18 MJ: That is good to hear. Started posting about this from the threads that was attached to my law firm Instagram. And I do have my own practice now. I have an incredible all -woman team, and I'm so proud to have built this. So when I started getting messages to that account or messages about my business or... photos of my law license that have my address and personal phone number there um which is all you can find it right I that to be more with MJ which doesn't totally distance me from it but it does give me a little bit of separation

0:09:56 Lydia: My God. Yeah, yeah. It's less like one clickable. Right.

0:09:59 Thomas: Even a little friction helps with these people. Boy, that's scary, though. Sorry that you've gone through that. It's fortunate you've got your own law firm. That's for sure. I can imagine other maybe other law firms wouldn't be as understanding. I don't know.

0:10:11 MJ: That's actually why. And I will say, I have a lot of friends, obviously, that are lawyers, and some at very big firms that are very incredible lawyers. They've been encouraging and saying, you know, you have your own firm, so you don't have to worry about anyone, you To keep credibility in the legal profession while you're still practicing, and I have no intent on stopping practicing, I have to be very accurate with what I say.

0:10:43 MJ: So I can't go make a clickbait YouTube saying, I don't know, Ryan Reynolds destroys Justin Baldoni's complaint, right? Need to stay credible. And I think that's very good advice and that anyone with a professional license should adhere to.

0:10:59 Lydia: Hint, hint.

0:11:01 Thomas: Yeah, but always wonder with these people, nothing screams you're correct about your side of the argument more than personally harassing people who disagree with it. You know what I mean? Like, what, do they have any self -awareness? I can't, I, I don't know. I always, I wonder, like, do, they sit there thinking we're right. And therefore I need to personally intimidate and harass anyone who expresses a contrary opinion. Or do they just know they're full of shit? Like, I never know. It's so crazy to

0:11:21 Lydia: And bully.

0:11:29 MJ: Really crazy, especially when it's like, I don't know Justin Baldoni. I don' t know Blake Lively. I never will, right? I'm not personally, I have no personal relationship with this case. I'm just telling you what I think about it. And it's a little bit strange to see how people take that so personally, right, like I'm insulting them.

0:11:46 Thomas: Say the least. Yeah. Yeah,

0:11:48 MJ: Yeah, I'm, I' m not.

0:11:49 Thomas: Well, all just, as listeners will have heard, completed going through this Jones v. Abel lawsuit in entirety. Should we begin with that? Do you want to give, I don't know, maybe overall impressions or first things that stand out to you?

0:12:00 Lydia: That

0:12:07 MJ: I think honestly, this is well done. It's a good complaint that if I was on the other side of this, I would be a little bit ticked off. Ticked off in a way that's like, oh, this is going to be hard to deal with. Because are allowed in New York State. And it not only that she had one, but she knew she had and she violated a lot of the terms in that agreement. And I am referring here to Jen Abel.

0:12:35 Thomas: Got a question. Just procedurally, it feels like, you know, we've seen cross complaints. We've seen so many things. We haven't seen anything at all from Jen Abel responding to this yet. Is that normal? Like, wouldn't there be a cross complaint yet? Or is that still part of the like response deadline that hasn't come yet? How does that work?

0:12:51 Lydia: They got the extension for.

0:12:53 MJ: Am quite sure it's due tomorrow. I on February 3rd, they adopted the case management plan and scheduling order that was in the other case.

0:13:03 Thomas: I guess my question is like, know, Baldoni didn't wait. Know, they had a cross -complaint, a counter -compliant right away. I mean, it feels like, I guess, can we read anything into that or not? Because I feel like this, when I read this, I thought, boy, this feels like a tough one. This feels like if the contracts are everything that Jones is representing and it would be, I don't know, kind of crazy if they weren't, but that's a separate question. Don' t even know what the response would be. But I also know when it comes to these kinds of things, isn't it normal that you would probably see Able, oh, well, I'm suing you for harassing work environment and all that. And like, it's just surprising to me that that wasn't ready to go sooner.

0:13:43 MJ: A case like this, and I've been on both sides here, I is actually how a typical lawsuit is going to go. The way that Justin Baldoni... his own complaints instead of just answering and having counterclaims, that's not normal. That's not how it typically happens. He wanted to get his information out there in way that wouldn't be in response to her allegations. Not positive on that, but that's how that would traditionally work. You're not going to go file a separate... when you know they're going to end up consolidated unless you're doing it to kind of get your story out there and you know in this situation I think what he did was probably smart from a PR perspective you know and they end up all together anyways

0:14:28 Thomas: OK. Oh. Good to know. So this is more of the normal course. So we can expect a complaint and the response very soon, if not by the time people are already hearing this. OK, well. Darn. I'm in suspense. I hope the listeners. Listeners, can you tell us what it is? I want to know, yeah.

0:14:40 MJ: I am interested I think they would expect is that because there are so many parties here that they do answer separately or file their responsive papers. So you could see some motions to dismiss individually, right? On behalf of certain parties. And then you could just see answers on behalf of others. Don't think this will be a joint answer, right. Because here the parties are. Very different. Jennifer Abel, her relationship, Melissa Nathan, her relationships with the plaintiffs versus Justin Baldoni and Wayfair. It'll be interesting to see what they do.

0:14:42 Lydia: Us what happened Speaking of parties, why? And I kind of questioned this on the last episode while we were wrapping up. Why do you think do have an opinion about like why Jamie Heath wasn't named as an individual party? Some of those texts seem pretty damning. I don't know why you wouldn't call him out specifically as an interesting.

0:15:33 MJ: A very interesting question. Am not sure. Maybe they think they have more evidence of Justin Baldomi's knowledge of the contracts and kind on the causes of action, they've alleged his encouraging of Jen Abel or something to go start her own business. I don't know that.

0:15:49 Thomas: It wasn't just so my thought was just because Heath was always acting as like president of the company or whatever. I thought it was like they that were taking him to be an agent of Wayfarer as whereas Justin Baldoni is a separate client and person, you know, like it's not that.

0:16:02 MJ: Mean, and it could be, but the fact that they personally named Justin Baldoni. Interesting and that might be my argument if I was on his side right is that you should not be suing him in his personal capacity you can sue Wayfair and it also depends on who the contracts were with and that's something that we should look at yeah

0:16:18 Thomas: Jonesworks had a contract with both Baldoni as an individual and Wayfarer. So that was my thinking was, well, since Baldoni, as an initial was a client and kind of that makes sense. But Jamie Heath was only ever like an officer of Wayfarers. So we weren't sure legally, like, do you still try to sue him in his individual capacity or is it just enough to name WayfarER for some

0:16:38 MJ: I would say that that's probably what happened is that they of the contracts the one with Justin Baldoni and the one

0:16:47 Lydia: Have like another procedural question, which is, can you discuss how this got consolidated with the broader Wayfair lively cases? Because my understanding was this is, know, you filed in state court, trying you're to move it to the commercial division, et cetera, et

0:17:07 MJ: So this is a civil procedure lesson. But was argue that it should not be in New York State because there the defendants in this case. So Jennifer Abel, Melissa Nathan, Justin Baldoni. Were originally sued in New York state court, and they argued that they should not be in New because this is a civil action where there's complete diversity of citizenship. That means that, know, you not all parties are in New and that there are parties that are residing in other states and that's why they should be in federal court. If you look at, it's actually the first filing, you the docket, the notice of removal, they kind of walk through why, um, they show that people live in different States. Uh, they actually show that Stephanie Jones says she lives in Connecticut. Um, I can tell you if you're filing in New York state, um. It removed, typically. Here, I don't think they care.

0:17:10 Thomas: We love those. Who argued that? Okay.

0:18:07 MJ: If you're filing a case in New York State, it's pretty strategic. Least in experience, federal court, Southern District, the judge they have assigned is going to move a lot more quickly. Deadlines will be enforced. Doesn't always happen.

0:18:22 Thomas: Is that? It has moved right along.

0:18:24 MJ: Yeah, it always happen in state court. Kind of depends. And then you have to think about the jury issue as well, right? Know, if I have a case in, and I do right now in Allegheny County, New York, which is a very rural county, and jury then is going to be from that county, right, if I had a case From a lot bigger pool. Right. So when you're thinking about that, you kind of think about all of those things.

0:18:54 Lydia: Does that interplay with the clause in the contract, you the employment contract that Stephanie Jones had with Jennifer Abel, where it said that she is agreeing to, you like like Jennifer Abels been in California this entire time, like that's not something that's new when she took employment with Jones Works. It seemed like it was addressed specifically in the

0:19:03 Thomas: Choice of venue, wasn't it? Yeah.

0:19:18 MJ: I think the fact that it's in there will really help them apply New York law here. Think I mean, if California law has a stronger interest, they might be able to argue that in motions. But I The Contract calling for New York laws is helpful to Stephanie Jones.

0:19:34 Lydia: Well, because I think there's a lot of changes in non -compete for California law now. So yeah, that would definitely be more beneficial to Abel.

0:19:42 Thomas: About the fact that while we're on that topic, that there was the arbitration with Wayfarer and that side of the contract, and then it said in Jones' complaint, Wayfarers repudiated the arbitation clause. How does that work? They can just do that?

0:19:56 MJ: No, technically, you can't. But I guess if they refuse to participate in an agreement to arbitrate, I mean, you have a couple of options. Like you could file a motion to compel arbitration. A federal arbitration act that allows that, and they clearly didn't do that, right? You actively engage in litigation instead of arbitrate, you can waive your right to arbitrate. And that seems here because they refuse to, and now we filed, we're not going to see arbitration here.

0:19:59 Lydia: Interesting

0:20:28 Thomas: Option. Jones could have the option of trying to compel that. But it seems like instead went went this route, which I guess makes sense. Think to non -lawyers like us, the consolidating thing feels a little weird because what'S the overall rule on that? It's just like any cases that are kind of at all related or something, because if I'm thinking, OK. Blake Lively is suing Justin Baldoni for this shadowy, you PR and campaign retaliation in the workplace, that kind of thing. And then Jones is sueing for some contract stuff. Know, like it just seems like, yes, related, but also it really make sense to me that that's the same case. Like, how does that work in general?

0:21:07 MJ: Lawsuits involve either common legal or factual issues, then the federal court, you know, they want to consolidate them to streamline the proceedings. See the timing is matching up here, the procedural orders, so the schedules are matching up, the attorney's eyes only designations, all of these things are lining up right now. I do think that makes sense here. So we have, you consistent rulings on these things. And it also reduces kind of the burden on the court, right, to have one judge, especially here where, you Very similar, like Jen Abel, Melissa Nathan, Justin Baldoni, Wayfair. They are all in the other lawsuit as well. Right. I think this makes sense. And yeah, I think Judge Lyman's a good judge for it.

0:21:50 Thomas: But they still all end up like separately. So the fact that they're all together, like Wayfair parties are all together in the countersuit. Well, it's not a countersuit, I guess. In the original lawsuit against the New York Times and Blake Lively, they're altogether there. But doesn't necessarily mean that they have to be together in this one in any way. Like they can still kind of respond separately. Kind of thing. I know it's kind of like dumb law 101 stuff, but behind you in the commercials.

0:22:16 MJ: Not dumb. It's tricky. And that's. I why lawyers have all their books of federal rules of civil procedure, everything, right? Yeah, exactly. This one isn't consolidated, but it is a related case. So that's why they're involved.

0:22:31 Thomas: That's two different things.

0:22:33 MJ: So this is a different, this has a separate docket completely.

0:22:36 Thomas: Oh OK. We were wondering about that. We're like, oh, it's still updating. We thought it moved dockets, but it didn't. OK, right.

0:22:38 Lydia: Interesting.

0:22:43 MJ: Don't think this has been consolidated. It's a related case.

0:22:47 Thomas: So then what is what's that distinction? What is that? So it sounds they're still using some of the same rulings on like the the order stuff you mentioned, but it's still. Yeah. What is the distinction? I don't know.

0:22:58 MJ: So a related courts and local rules will treat them kind of if they're related, if they have the same or similar parties, common legal or factual issues. We're probably going to have discovery that overlaps as well. Materials, documents, witnesses.

0:23:20 Thomas: Not doubling that up makes sense.

0:23:24 MJ: Then if completely separate cases could result in kind of like what we talked about with consolidation, but if they could result has an interest in consolidating them or assigning them to the same judge. So I would say this, if this had a different judge, that would be ridiculous, right?

0:23:39 Thomas: Right, right, right? OK. So do we want to talk about the causes of action now, maybe? And you could kind us what these are in normal people terms and kind of what Jones would need to show to on them, possibly. Let's go through the cause of action kind section. And again, translating MJ from lawyer to normal human. Seems as though what you do in the complaint is first you got the intro where you really grab people. You then they do this like expanded section that a repeats lot of that stuff, but has more detail. And It goes through specifically which things they're alleging, and then it kind of restates some of the facts more specifically related to like those causes of action. That right? Is that what we're doing here?

0:24:30 MJ: That's completely right.

0:24:31 Thomas: Then we're going to hear the of action specifically and then some amount on specifically tying the allegations in the entire complaint to that, which thing applies to which cause of action and which defendant and all that. So that's what Lydia is going to kind of read through. And I'm sure we'll stop you and ask a bunch of questions.

0:24:49 Lydia: Our first cause of action is breach of contract regarding the Abel employment agreement. And this is against defendant Jennifer Abel. Through it, and Jones works incorporate each and every allegation set forth above as if they were fully set forth herein. The Able employment agreement, Able agreed, among other things, that one, she would hold in strict confidence and trust for the sole benefit of Jones Works all confidential and proprietary information, and that all business and plans made known to her while employed by Jones Works are the permanent and exclusive property of Jones works. She would not use any company proprietary information to solicit, induce, or attempt to solicitor induce any business from any of the company's existing clients, employees, referral sources, or business contacts. Three, during her employment and for six months following the date of any termination, she would not compete with Jones Works or engage in or participate in any business that is in direct competition in any manner whatsoever with Jones works. And four, during the employment term, Jones Works was entitled to her loyalty, including acting in the best interests of Jones Works. Able breached the Able employment agreement through her actions as described in this complaint, including by, among other things, one, failing to hold in confidence, confidential information for the sole benefit of Jonesworks and by soliciting confidential information from at least one Jonesworks employee after her termination. Two, using confidential information to solicit, induce or attempt to solicitor induce business from Jonesworks clients and business contacts. Three, directly competing with Jonesworks in the six months following her departure from Jonesworks, including by starting a competing company and poaching and attempting to poach Jonesworks clients. Soliciting and inducing and using confidential information to solicit or induce other Jonesworks employees to leave Jonesworks and or become employed by her or other competing firms. And five, breaching her duty of loyalty to Jonesworks by working against the interests of Jones and Jonesworks during her period of employment. And Jones works have substantially performed the ABLE employment agreement or were excused from doing so because of the actions of ABLE. Excused from Doing So. OK.

0:26:48 Thomas: Yeah, that just means they were acting kind of on their end in good faith until the breached it, right?

0:26:53 Lydia: Yeah. Breaches of the Able employment agreement approximately and directly caused monetary damages to Jones and Jones works and an amount to be

0:27:01 Thomas: Right. So that's the first cause. How does that sit with you? What

0:27:04 MJ: Yeah, I think they do a really good job walking through the elements that are required to establish a of contract, right? Cause of action has elements. So when you sue someone, you can't just kind of walk into court and say they wronged me and expect to win. Have to kind of go through a checklist of things that you must prove to get a favorable judgment. So in this breach of your case falls apart. So what they need to show one, there was a valid contract, right? Of see that right away, right, at the complaint phase, you accept the pleading as true.

0:27:35 Thomas: At the complaint phase, they just say there was, right? Don't get get the contract, right. Right. Okay.

0:27:44 Lydia: Have a couple of questions about the employment contract while we're here. In the allegations, the factual allegations, Jones kind that Abel had a fiduciary duty, but then also called out like specifically she's not, title you of partner does not mean ownership interest. Then Abel agreed in her contract she had a fiduciary duty. Is that enough guess my question is, fiduciARY duty among employees, is that, like – is that surprising or typical or

0:28:10 Thomas: What does that entail? Is it? Yeah.

0:28:12 MJ: Yeah, I think it would be a hard argument to make. Right where she agreed here, can you say that they do have a fiduciary duty if it's in the employment contract and if they are acting at all in a supervisory capacity.

0:28:26 Thomas: Oh, OK.

0:28:26 Lydia: Interesting.

0:28:27 Thomas: Yeah, I think so. I think we should back up to kind of explain that. We had a little experience with that because as owners of the business that we had a lawsuit over, there's the fiduciary duty. And it was a crazy situation. I can't believe some of the things it meant and didn't mean versus if you're just an employee of a company. Broadly And speaking, you don't necessarily have that fiduciARY duty. So what what in general is that fiducial duty over and above, whatever? Like, run of the mill employee might have.

0:28:51 MJ: Looking at New York case law and it says right here, like it is well settled that under certain an employee owes fiduciary duty to his or her employee during the course of employment. Means that an employee is at all times bound to exercise good faith and loyalty and the performance of their duties. And that's a quote from a New York case, actually from the New York Court of Appeals, which is New York's highest court.

0:29:14 Thomas: Oh, so wait, did that say employees always have that?

0:29:18 MJ: Doesn't say that they always have it, but it does say that the plaintiff must prove kind that a fiduciary relationship arises when one of them is under a duty to act for or give advice for the benefit of another. They say that it's very fact specific. You guess what we need to do is see. Those facts are, but definitely New York courts are holding that if an employee acts disloyal during his or her employment, they can apply kind of that doctrine and apply a duty, a fiduciary duty to them.

0:29:50 Thomas: What do you think that would look like? Broadly And speaking, if it were established that Abel had a fiduciary duty versus if it weren't, what do you think might change in this complaint or

0:29:59 MJ: Think it's undisputed based on what we know about the case that she was in a high -level position, right? Whether she was an owner or not, she was definitely an executive. She was handling some of the large clients. It seemed like she had some decision -making power over the operations and over the clients. And she definitely had access to confidential information. Saying definitely. My understanding, you know, if she's a high level employee, she's going to owe that fiduciary duty to the company.

0:30:30 Thomas: Sorry. I was trying to ask, like, what does that change in terms of what she like that would have been wrong versus not? Like, is there something that if she had the fiduciARY duty? Wrong that she did this or it's breach that she versus if she didn't have that fiduciary duty, actually it's fine. Yeah. Like what kind of actions?

0:30:44 Lydia: It wouldn't matter.

0:30:46 MJ: I get your question. I'm sorry. I would say the causes of action. So the fifth cause of action, the faithless servant, and then the sixth cause of the breach of contract, the torturous interference with contract. The other breach of contract, it would just impact those.

0:30:48 Thomas: That's all right. Okay. So we can talk about those later then when

0:31:08 Lydia: Other question I had regarding her employment contract and just like with with your experience with non -competes, you what seemed to me to be, I don't know, like six months felt like a long time. That pretty standard for New York contracts? Know, that six month timeline regarding not competing?

0:31:24 MJ: Actually, we typically see them longer.

0:31:26 Lydia: Really? Man.

0:31:28 MJ: And you haven't heard me say this yet, I hate non -compete agreements. Most situations, I think non -solicitations are fine, right? You can't steal your clients. Non - Compete agreements are really difficult and still represent young trying to leave a job and they're trying to be held to a non -compete that's going to keep them out of their chosen industry. I'm fighting some right now that are two to three years.

0:31:52 Thomas: Yeah, I think California has done about that, haven't they?

0:31:56 Lydia: Yeah. I think they've they've gotten rid of it.

0:31:57 Thomas: Because the tech industry has so so many of those cases.

0:32:00 MJ: York has tried a couple of times. I think in 2023, the legislature a bill, but our governor didn't. It, vetoed it. So yes, I know. With it. Still It allowed for in the sale of a business. It still said there couldn't be a non -compete there. A problem with that, right? You can't sell your business and then go start a competing one.

0:32:07 Lydia: Kathy.

0:32:21 MJ: So I think it'll happen eventually. Really difficult. Think they can just ruin people's lives. But

0:32:27 Thomas: Right. So morally speaking, we're also not fans, but in terms broadly in contracts um this seems you said shorter than ones you've seen so does it seem like this clause uh would hold up from what you know yeah

0:32:42 MJ: Six months. She was a high level employee. I think that this could hold up in New York court with New York Law Applied.

0:32:48 Thomas: Now here's my question. We read that email that was like her resignation from July. And she mentions, Abel mentions going her own kind of way and starting a company. And that really me wondering. Jones have had any responsibility to like put her on notice? Hey, actually, you signed this contract saying you can't compete. Could that be evidence that had like modified that in some verbal way? Or how do you think that will play into things?

0:33:14 MJ: I think it'll be interesting to see, but I mean, technically, if there's a contract and it's signed, it's hard to argue that it's not enforceable just because she didn't respond and say, you know, I'm reminding you of your non -compete agreement. I

0:33:26 Thomas: Right. I know there's some things in the law that are kind of like that, though. It's like if someone. Something then and you don't do anything about it then just kind of like works as an amendment but yeah okay we don't know what the response was to be fair but

0:33:38 MJ: We don't know right now. It'll be interested to see how that plays out. And I think, I mean I would try to make the argument that because she was based in California. California law should apply to this, whether would try to, I don't know if it would be successful.

0:33:49 Thomas: Interesting

0:33:50 Lydia: Like if you were representing Jen Abel is that kind of the approach you would take.

0:33:57 MJ: I would trying to think of a way to get that to apply. Yeah.

0:33:57 Lydia: Oh,

0:33:59 Thomas: Yeah. On one hand, I have sympathy for that. But on the other hand, it's like, well, you sign the contract and like you can't. It feels very bad faith to like sign something that agrees to that and then totally no like good faith approach to it, violate it and then be like, but I'm in California. So I don't know. I'm kind of torn on that.

0:34:16 MJ: I agree. And I think here where you're a higher level employee, and you're allegedly, you working to take clients and kind working with other individuals to take whole reason that non -competes are not illegal right now because does happen and it does destroy businesses. Can argue that that goodwill that Jones had built with Baldoni and with Wayfarer had value. This is a situation where if client came to me with this problem, I would say, yep, we're sending that demand letter. I'm reminding her of her non -compete, right? There are situations where you're like, oh, come on, we'RE not doing anything about this. But this one, you would do something about this, there are identifiable damages here.

0:35:00 Thomas: It just seems so bad. I mean, some of this stuff was so bad, like the like the printing out and taking all the stuff, you know, as she's leaving and the changing the logo of the thing. Like, mean I'm sure you can tell us this is this is only one side of a complaint and there could be plenty of other stuff we haven't seen. But boy, did that not seem good.

0:35:11 Lydia: Taking that client form but just replacing the logo. She

0:35:22 MJ: I will actually, I can't obviously obviously say the case, but we had a very large case where we had multiple defendants that left a company. Some were terminated, which when you're terminated you cannot enforce that non -compete in New York State in most circumstances.

0:35:37 Thomas: I didn't think about that. Was terminated, wasn't she? Because they had to escort her out of the building kind of thing.

0:35:41 Lydia: 21st. Her last day, yeah, she terminated. So anything after August 21 is free for all. But anything that happened prior to August 21, which we know it did, then,

0:35:54 MJ: She had provided notice at that point, right?

0:35:57 Thomas: She provided notice in July. That's going to be an interesting thing. It's like if she provided notice and July and said, I'm leaving August 23rd, but then Stephanie Jones is like, Hey, she's stealing shit. And like, I got a need her out of here. Feel like that'd be a tough argument to say, well, you technically fired me. So now I can compete where it's like, yeah, but I had to get you out. Cause the thing you were doing was competing and like taking clients.

0:36:20 MJ: She very clearly here, that this would not cause an issue with the non -compete. Like if she gave notice, it would be kind of if she was fired for restructuring. Right. And just just left and didn't take anything and started competing and did everything right. But But started to compete, then there might be an issue.

0:36:37 Thomas: Okay, okay. Sorry, so your case, go on about

0:36:38 Lydia: Interesting

0:36:41 MJ: The individuals left or they were told that they were being terminated, they worked there for decades and they started emailing stuff to themselves. At this point, they didn't know that they weren't going to compete. They just knew they didn'T have a job. Some of these people weren't they didn' t have their own computers. They didn't have anything. Right. So they were emailing themselves photographs or pictures. You Videos of their family, videos that were on this work computer. And if read that complaint, you would think that they took like most precious, incredible things.

0:37:11 Thomas: Trade secrets. Yeah, the recipe for Coke. Yeah.

0:37:14 MJ: Yes. Right. Because you can. You can make those allegations in the complaint if you're just saying they emailed 100 files to themselves moments after they were fired. And that sounds terrifying, right? Where we see she had her logo on a letter and stuff like that, not good for her.

0:37:24 Thomas: Fair. It was like the client intake form and she just right. It was something like that. And she just like replaced the Jonesworks logo with her new company. Yeah, it does. I see. Yeah. So that's interesting. So I totally taken that some of this could be misleading and you could be like, oh, actually, it's innocent files. But boy, based on how this was pled alleged, the facts like it doesn't seem like that

0:37:54 MJ: It doesn't. And I think, you the texts between Abel and Nathan about how they're, you should go with Jen. That's not good. Not good for them.

0:38:07 Thomas: So let's say she wins on let's see Jones wins on this. What is the damage kind here? I was trying to think of something like stealing an employee where she convinced the employee to leave. Like, I don't how do you evaluate what the damages are? Is there is it just going to depend on what the contract says or what?

0:38:23 MJ: Have to show quantifiable losses, right, that resulted from that breach of contract. So, would say they could, and what typically happens is they'll bring in an expert to help show that. They would do is look at the clients that they might have. So you could look directly at the Allegedly, or the loss of business, they can look at reputational harm. And what will have to be exchanged is this, you know, if they go all the way through discovery and move on to that expert discovery phase is like they will be exchanging the amount of money that Wayfair has paid to her and other clients that may have left. You out costs, the costs that ABLE incurred to provide those services. And it'll be all over the place, but they will have to show quantifiable losses and they'll come up with a number and make the argument. Sides will hire an expert to look at the same financial information and they will come out with wildly different numbers of what the actual loss was.

0:39:24 Thomas: Is that it? Or is there any sort of punitive anything that can get tacked on?

0:39:28 MJ: Don't know off the top of my head from contract, I don't think you're going to see any punitive damages in there. Sometimes you have an employer, right? Like if you leave, we get, you 50 % of all clients that you take for one year. And then you can argue that that's a penalty and not enforceable. I don't think I saw anything like that.

0:39:50 Thomas: Should

0:39:58 Lydia: Right. Second cause of action, tortious interference with contract regarding the ABLE employment agreement. This is against defendants Melissa Nathan, Wayfair and Justin Baldoni. First bit of this reiterates what we read in the first cause of actions. So I'm just going to skip over that piece and get to the meat. Nathan Wayfaire and Baldoni were aware that ABLE was employed by Jonesworks and on information and belief were aware of that Able's employment was governed by a contract containing industry standard terms such as those described above. Nathan Baldoni and Wayfair induced, encouraged, and procured Abel's breach of the Abel employment agreement without justification, including by, among other things, one, breaching her duty of loyalty to Jonesworks by working against the best interests of Jones and Jonesworks during her period of employment, and two, encouraging and inducing Abel to violate the non-compete, non-solicitation, and confidentiality provisions of the agreement. Nathan Baldoni and Wayfair, in bad faith, intentionally procured, caused, and facilitated Abel's breaches of the Abel Employment Agreement. But for the misconduct of Nathan Baldomi and Wayfarer, Abel would not have breached the Abil Employment agreement. And Jonesworks have substantially performed the Abl Employment Agreement, or excuse for blah blah blah, the intentional interference by Nathan Baldi and Wayfare with the Abul Employment approximately and directly caused monetary damages to Jones and Jones works and amount to be determined at trial. The intentional interference by Nathan Baldoni and Wayfair with the ABLE employment agreement was willful, wanton, malicious, and or in bad faith or undertaken through improper means warranting an award of punitive damages and an amount to determined trail.

0:41:28 Thomas: Okay, what should we know about this kind of thing here?

0:41:31 MJ: Using these elements and they're walking through them really well. Right. So they states that there's a valid and enforceable contract between Jones Work and ABLE. Has to happen right for tortious interference with the contract. They clearly identify that ABLE employment agreement as a valid contract. Seen in motions against Justin Baldoni that he alleges. Interference with the contract, but he doesn't identify the contract he had with WME there, right?

0:41:59 MJ: So here we see that they're doing that. They're saying specifically the contract that was at issue, and then they explain how they performed under the agreement or they were excused from doing so. So they met kind of their burden under that contract. Allege that the defendants knew of the contract. Kind of why they're using the language this way, right? And they say, and this will be hard for them to prove, but I don't think it will be difficult at the motion to dismiss phase, is they say the defendant's induced able to breach her contract by her to violate the non -compete, non -solicitation, and confidentiality provisions. Practically speaking, it's unlikely that Justin Baldoni and Melissa Nathan and Wayfair actually looked at Abel's employment.

0:42:46 Thomas: To have actually read it? Oh, huh.

0:42:48 MJ: They don't have to have actually read it, but that will be something that will come up, right, do a good job arguing, right, that they encouraged her to violate confidentiality, breach her non-compete, break that duty of loyalty. If they actively recruited her, if Melissa Nathan actively was encouraging her to stop working with her, and I think in some of the texts that we've seen that may have been happening, but we don't know if they knew of these terms.

0:42:54 Lydia: Like how could they encourage her to violate those clauses if they didn't know those clauses exist? Yeah. Yeah. Hmm.

0:43:21 MJ: Pled it. Well, I don't think it will be dismissed.

0:43:24 Thomas: But it will depend on discovery and what they can actually prove out.

0:43:27 MJ: Well, we'll have to look at that. Right. So Jones works. I mean, they'll need to prove like direct. They'll need direct proof. So they'll want emails, messages, conversations. Will be questions and depositions. Right, to see whether Nathan Baldoni or Wayfair kind of encouraged her to break her contract.

0:43:45 Thomas: We do know that they signed right on with... Don't Abel after this and stopped Jonesworks pretty quickly? So that doesn't seem great for them.

0:43:53 MJ: It's not good, right? I mean, I think they'd probably argue that they hired her after she left, right, they didn't persuade her to breach her contract, they didn't encourage her.

0:44:02 Thomas: Even that would be a breach of her contract. I guess they would say they didn't know about a non-compete or something?

0:44:07 MJ: Would definitely be a breach of her contract. But it might not show that those kind parties, Nathan Wayfair and Baldoni, you

0:44:16 Thomas: Knowingly? Okay.

0:44:16 Lydia: Hmm. About on the flip side of this this item this where it says but for the misconduct of Nathan Baldonian Wayfair Abel would not have breached the Abel employment agreement. Is that important? Like

0:44:26 Thomas: They're like one of the elements.

0:44:29 MJ: Know if it is, actually. I have written down we need an existence of a valid contract, knowledge of the contract, intentional inducement, actual breach, damages. But that might be relevant for the improper means or the kind of malice at the end where they're alleging that. Sentence is there because want damages, punitive right?

0:44:51 Lydia: I see. OK,

0:44:52 Thomas: Talk about hypotheticals because this kind of makes sense. So if I've got a contract with someone, I don't know, I got a landscaping business or something and I have a contract employee and they're at someone's house doing some landscaping and that homeowner is like, hey, come work for me directly or something. It's not like they Seems like it wouldn't be necessarily a tortious interference. But what kind of things would be like just in real everyday terms? What kinds of actions would like be really bad for Wayfarer parties if they undertook them regarding this cause of action?

0:45:27 MJ: Say sometimes, like, say you knew employee an had a, if I, it doesn't work with lawyers because we're smart enough to make sure they can't be enforced against us, which is so messed up, right, if you think about that, you can't enforce a non -compete against a lawyer. Example would be if I left a company and I was a COO or something and I went to another one and I knew that the person that reported to me that was so great had an employment agreement and it was for a term of years and I know everything about that contract and I encourage them to come over and to breach their contract and to bring all of their clients with them. Another example would be if you are competing with a business and you, you in the same industry and you find out that, you you're trying to get them to come and work with you. You kind of, it's basically like if you go over the line, right? It's not just normal business competition. It's deliberate. It is harmful. Especially if you're, an would be like lying, being like, hey, that business is going bankrupt. You should come work with us.

0:46:33 Thomas: That's my question, because when it said undertaken through improper means. If they just were like, hey. Have a better situation here if you break off, have your own company, and work for us directly. You'll be better off. Is that tortious interference? What does it mean to be improper means and what are the lines there?

0:46:56 MJ: It is really, I don't know. I don' t know the exact line. I think though that the plaintiff here Jones' work has to demonstrate that the defendant knew of the contract, like knew what was kind of in that contract, which is actually why I think the the fourth cause of action against Jen Abel and Melissa Nathan for the same issue, the torturous interference with contract, I think that's potentially a stronger claim than the second cause of

0:47:21 Thomas: Interesting. Well, Well, it's I'm looking at the clock, looking will stop on that second cause of action. And then when we come back for the next episode, for episode 10, we'll get into the further causes of action and are some really interesting ones in there. There's some sleepers in there that I can't wait to have MJ tell us about. If you'd like to hear the next episode right away, reminder, they're available on patreon .com slash gavelpod ahead of time. Everyone else, we'll see you in a little while. Next episode, we're going to tackle the rest of the legal stuff. Again, like I said, there's some interesting stuff in the later parts of the causes of action that is sneaky. It's very interesting. I can't wait to see what's going to happen with it. All right. Well, that's our show. Thanks so much for listening. We'll see

0:47:48 Lydia: Yeah. Kind of touched on that, but in a future episode.

0:48:32 Thomas: In a future episode. Whatever. We can just skip that part for now.

0:48:36 Lydia: It's just kind of covering your bases.

0:48:37 Thomas: Maybe. I don't know. Is there a hockey fight in your house happening?

0:48:43 MJ: Oh, can you hear it? Oh my gosh, I'm sorry. They're so far away from me. Can It is probably a hockey fight. They fight over mini sticks constantly. I am here.

0:48:54 Lydia: That's your OK. All right. No worries.

0:48:55 Thomas: Muting the fight. Yeah, it's fine. Who won? Yeah. Yeah. That? I heard a noise. Big noise. Can you retake the, just the last part?

0:49:07 MJ: I'm it was rollerblades coming off, if you can believe it. And in the front hall. I'm not even close. I should have stayed in my office.

0:49:13 Thomas: You've got an echoey house probably. Yeah, just

0:49:16 MJ: Okay.