Lively v. Baldoni 26 - MJ Morley on Jen Abel's Counterclaims

Transcript

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

0:00:01 Clip: All rise. Court is now in session. Court is reconvened. I may be seated. Maintain order. The federal rise to face the jury and harken to its verdicts.

0:00:25 Thomas: Hey, it's gavel time.

0:00:27 Lydia: I like that. I know.

0:00:29 Thomas: Fine. First. Wow. Got there. First one. Lydia's liked. It's been nonstop criticism over here. Just, yeah, I edit most of it out, but it's verbal abuse. It gets pretty intense. But finally, I got one through. It's Gavel Gavel. How's it going? I'm Thomas. That's Lydia. How are you doing?

0:00:35 Lydia: You've been workshopping at home, too. Just, okay. Sue me, then. Hi, I am doing well. This has been a fun docket, and it's just going to get more fun. She sure is.

0:00:56 Thomas: I'm super excited. Why am I so excited? You didn't bother to ask me. Because MJ Morley is on the show today. So excited. And probably the next day that you're going to listen. Because we've got a lot to talk about with these. The causes of action were confusing to my non-lawyer brain. And that's why we get a lawyer brain on here. I mean, a good lawyer brain. Sometimes it's like a pejorative and it's deserved, honestly. But not with MJ. Yeah, yeah. Not with MJ, MJ is a good kind of lawyer brain, And we're going to hear about what these actually mean. These California labor code things, like how does that work? What's the recourse on that? The timing on all of it? I don't get it. We hope MJ does. And she probably does. That's what we're looking at today. I'm excited.

0:01:16 Lydia: Is yeah I think most lawyers would agree with you too about that so yeah me too um I think maybe you should try and plug our show and the patreon and the Patreon that's my criticism if you want to hear more of our bickering on Gavel Gavel is better than when we joke about a fourth kid announcement so yeah head on over to patreon.com/gavel-pod because if you're not already over there I mean the people who are they've been getting this stuff before you and I don't I don't know how you feel about that I would I would have major FOMO and I would be seeking to change that so if you're like me and let's face it you probably are because you know it's the year 2025 and we all have FOMOs all the time I wish we didn't but we do head on over to patreon.com/gavel-pod and it's really fun over there full of great people and we love everyone who's over there let me love you

0:01:42 Thomas: Why don't we just go ahead and get on over to it? Unless there's any other criticisms of my intros that you have while we're all listening here?

0:01:52 Thomas: Everyone listen to Gavel Gavel. Maybe be the change you want to see in the podcast. Why don't you do it? It's a new podcast announcement. Bicker pod.

0:02:21 Thomas: It's true. I would be jealous. Yeah. Yeah. Wow. Got really intense. All right. After this, we will get on with MJ Morley.

0:02:47 Lydia: Too

0:02:57 Ad: [Ad break 1 — ad music]

0:02:57 Thomas: And we're joined once again by MJ Morley. So excited to have you on because we were in over our heads on some of this. How are you doing today?

0:03:06 MJ: I am great. Thanks for having me back, guys.

0:03:08 Thomas: Yeah, our pleasure. We're now going to lock you in this room for 10 hours while you explain what is happening with these counterclaims.

0:03:16 MJ: Yeah, we might need some more help because they're all over the place.

0:03:19 Thomas: Yeah, yeah. I guess my first question would be, I remember I asked you like, oh, it seems weird that they didn't have these counterclaims ready to go earlier. And then I think your answer was like, no, it's kind of all made sense in the way Baldoni did it was more abnormal. And so maybe just before we get into it, once these were filed on March 20th, just procedurally, is there anything we should know like out of the norm about any of how this has gone up to that point?

0:03:45 MJ: To March 20th, no, I think it was pretty standard. That's what you normally see if you file a complaint against someone. They do not typically start a separate action to allege causes of action against you that arise from those same facts. So this is pretty typical to, yeah, to wait until it was your time to reply and then file counterclaims.

0:03:49 Thomas: Complaint. This was more typical. Okay. And then another thing I kind of realized, the way this works, you're not really likely to see someone's defenses to like the other claims really, right? You're going to see them do counterclaims. But I was realizing the parts that's like defending against Blake Lively's complaint, it's mainly just the like answering all the allegations in paragraph four, defendant admits this, but denies that, right. Like it's going to be pretty like dry on that kind of stuff, because you don't do that until later. Is that right? Like by the time you do discovery and all that, that's when you would actually like on the merits, try to defend yourself. Whereas these counterclaims are going to be maybe related to that. And maybe we'll have some defenses in there, but are going be what proactively you think you can sue the other person for, right? Yeah.

0:04:45 MJ: Exactly. Yes. And it's, you know, admit, deny, or DKI is kind of what we say when you're answering a complaint. And DKI as in you do not have enough knowledge or information to answer. So you really only get more details if you file a motion to dismiss, right? And that's where you're arguing kind of on the legal basis.

0:05:03 Thomas: Right. But even then it's likely to be the very strict, like legal stuff, right. Right. So it might not necessarily be because I think Lydia said something like, oh, you know, this this one charge wasn't even they didn't even have an explanation for it. And in that moment, I was like, Oh, well, I guess they wouldn't necessarily have to put all their explanations for like all the stuff that Stephanie Jones accused them of, because that could come far later. And by the time you get there, that means you probably survived like a motion to dismiss and stuff, too. Right. So that could be later on down the line.

0:05:31 MJ: Right? Yeah. I mean, the next big thing we'll probably see when we get through discovery, if we ever get through discovery would be those motions for summary judgment. And that's not just about the law. That's where you have facts.

0:05:42 Thomas: Okay. Yeah, I'm excited for that. All right. So that makes sense. So that also allows us to be able to skip through, you know, most of the complaint. So what did you make of Jen Abel's counterclaim against Stephanie Jones?

0:05:43 Lydia: Oh yeah me

0:05:55 MJ: I thought the counterclaims were very interesting. I think that when we talked about the JonesWorks complaint against Abel, we talked a little bit about the choice of law clause in the contract, her employee employment contract. And I think they went right after that in their counterclaims.

0:06:11 Thomas: Yeah, I think a lot of it makes sense. I mean, I'm usually on the side of employees on stuff, you know, and she works in California. She's in California doesn't seem insane to me that Stephanie Jones wrote a contract that's more like New York based. I don't think that was like malicious or anything, but ultimately it seems reasonable to me that maybe California law would apply. I was just confused about the causes of action, though. I just didn't understand. So first, second, third, how many is it until fourth? They all seem to be just around how the contract was written, citing stuff being like, hey, California says you can't do that.

0:06:26 Lydia: Too

0:06:46 Thomas: But I didn't really understand, like, is that a cause of action?

0:06:46 MJ: So in full transparency, and I think you guys know this, I'm not a California attorney, but I can explain how I read it if that's helpful. A declaratory judgment. Basically, we want the court to say that the contract provisions are void, right?

0:06:55 Thomas: Sure. Yeah.

0:07:04 MJ: Saying that New York law applies, that should be void because she lived and worked in California the whole time. She wasn't represented by a lawyer when signing. She kind of lays that all out there. But ultimately, if you just look at those kind of, I think, first two or first three, she's essentially saying that all of those contract clauses have to be void under this California Labor Code Section 925.

0:07:25 Thomas: Yeah, I mean, does that seem plausible? I felt like when we were talking about it, and we kind of looked over the California law a little bit as non -lawyers. It seemed like, yeah, sure, California got rid of non-compete clauses. But when I think of what Steph Jones sued her for, it's a lot like the breach is a lot more than just that. But on the other hand, I guess now that I think about it, is that going to be just a question if she's going to have to defend herself against that? And she's trying to just the stuff she's proactively saying is, hey, make sure these clauses don't count. But it doesn't seem like that would, would that get rid of the whole contract? It doesn't seem like it should.

0:07:36 Lydia: -compete

0:08:01 MJ: So I don't think that it would, but certain provisions within that contract that are trying to apply New York law instead of California law, she's trying to make California law apply there. She's trying to get a judge to kind of throw out those parts of it that doesn't get rid of everything that Stephanie Jones has, it might get rid of some of her claims, but it wouldn't get rid of all of them. So she's arguing that the California statute applies California law has to apply to her kind of those provisions of her employment contract. And the other side would say no, I mean, you agreed to New York law applying, they put that very clearly in their complaint.

0:08:35 Thomas: Okay. Here's why I was confused. And I think I was just getting a little too amateur lawyer ish, but I just feel like the choice of law battle feels like something that doesn't usually happen like in the causes of action themselves. But is it just because of the nature of first off, am I just wrong about that? Or is it because California Code Works?

0:08:55 MJ: That law probably has declaratory relief in it that says you can get a court to say that no, this doesn't apply. And there, I mean there are elements that you need to kind of work through to make sure that it applies. But from what I've read, you know, California created this law to protect its own workers from like getting dragged into legal battles far away from their house. And an example of that would be, so Florida has non-compete laws that aren't great. There are lots of corporations that have multiple branches across New York state that we've had to deal with that fight over where the big corporations have said Florida law applied, they signed these agreements, Florida law applies here. And New York specifically has said, no, Florida law does not apply in New York to people doing work in Newark. And they had a presence here, the business itself. So there are big cases in New York state that specifically say like, no, you're not going to apply the law out of this state to people working and living in this state. So this, I mean, this is a real argument that she's putting forward. States have real interest in protecting, you know, their citizens. And I think that's, that's why those laws exist.

0:09:59 Thomas: I think the key is, so when I look at the third cause of action, paragraph 123, accordingly, Abel requests a declaratory judgment to the effect that the contractual restraints of trade imposed on Abel by the 2020 and 2021 employment agreements are void ab initio, and that Abel may participate freely in her chosen profession of public relations unencumbered by restraints -of -trade inhibiting her activities, including without limitation, the solicitation of clients. So that seems like they're trying really hard to say, hey, these things in the contract go against this California law. Therefore, it's Mad Max world. I get to do whatever I want. You know, like there was no contract. And normally, isn't there like severability clauses and crap that normally like I wouldn't think that that would throw out an entire contract, especially because it seems unjust that you'd then be able to poach clients because of this kind of technical thing that didn't really matter. Like it didn't really affect. None of the stuff that California law forbids really affected anything as far as the complaints, right? Because she never got a chance to compete.

0:10:59 Lydia: Yeah and it was before the california law had been passed past yeah

0:11:02 Thomas: Yeah, the non-compete part. Yeah. But I guess the choice of venue, I think, might have predated that. But anyway, the point is, do you have any idea the odds of getting an entire contract thrown away because of this?

0:11:13 MJ: And I don't know what the California statute says specifically about it. But with that contract that we just talked about, you know, the example with New York and Florida, instead of applying Florida law, they applied New York law to look at the contract, right? So that could happen, right? The judge could look at that contract differently. And it doesn't allow her to go and solicit Jonesworks clients while she's working there or, you Know, allegedly disparage her boss, right? You can't know that that wouldn't make sense.

0:11:36 Thomas: I would hope not.

0:11:41 Lydia: I don't recall in that non -compete law that came out in california I don't recall an element that they cite regarding the non-solicitation being unreasonable so it's just it's interesting here that now in this cause of action she's trying to claim that the non-solicitation provision is also illegal

0:11:50 Thomas: No. Yeah. I don't think so. Oh, is she or is she just trying to say because parts of this can't have happened in California. Therefore, it's fair game and I get to do whatever I want.

0:12:12 Lydia: Well, yeah, I mean it says that you know including without limitation, non-competition, non-solicitation provisions, unlawfully restrain Abel's right to pursue lawful employment.

0:12:22 Thomas: Oh, wait, what paragraph is that again? Yeah.

0:12:22 Lydia: So like that seems like it's really stretching the law. This is 118.

0:12:25 Thomas: Non-solicitation provision. So they're trying to sneak that in. That seems crazy.

0:12:28 Lydia: It feels like it because she didn't call that out in her like allegations or anything like that when she's telling her story. This is kind of the first time I really see them trying to bring that in.

0:12:38 MJ: So With Newark, specifically, it's really really hard to enforce non-competes right now. I mean, even though they're legal here still, but non -solicits are a big deal, right?

0:12:45 Lydia: OK.

0:12:48 Thomas: Yeah.

0:12:48 MJ: So if someone comes to us and their former employer is saying, you're violating your non -compete, we'll look at the non-compete. If it's ridiculous, we'll say, Oh, don't worry about the non-compete, but do not solicit, right. Do not take anyone, not clients, not employees. I cannot imagine that California would say that that's okay.

0:13:04 Thomas: I can't either.

0:13:06 MJ: I think the argument there is they're saying that I think she says it was lawful, the actions that she took, right?

0:13:10 Thomas: What was lawful?

0:13:13 MJ: That she's, she wants to engage in her lawful profession.

0:13:13 Lydia: Yeah, I'm looking at the California Business and Professions Code right now and specifically the subsection that is cited here. It's a lot of the same language that she's using in her cause of action. Every contract by which anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that extent void. But it only ever talks about non-compete agreements and non-compete clauses.

0:13:38 Lydia: There's literally nothing in this code about non-solicitation. That was not the intent.

0:13:44 Thomas: And the choice of venue stuff. So those are the two things. Oh, it's a different law. Okay. So it seems like overall her strategy is use those two things to get the whole contract out. Does that seem right?

0:13:47 Lydia: Yeah,

0:13:55 MJ: Seems like that's the argument here. Yeah.

0:13:57 Lydia: But that's a separate that was a separate code yeah yeah and try and excuse her solicitation efforts of taking wayfarer and justin baldoni by lumping it in as part of this non-compete element even though there's not from my understanding there's no law to back that

0:14:10 MJ: That's the way that I'm reading it as well. I think it's really interesting in arguing that it's a lawful, what she did was lawful. I don't know how you can argue that, right. It just based on what we've seen and she had confidential client information allegedly and continued to use it. And it's one thing to have clients follow you after you leave, But I think it's very different to plan to take clients with you and potentially take, you know, some of the documents, some of the information that you have from your current employer. And I think that would be kind of the argument is say California law does have to apply here to this contract where JonesWorks. I mean, the argument would be like she's using very specific confidential information. She's using our methodologies. She is violating confidentiality agreements about client information, right? That might be a better argument than you can't compete with us if we're in California, like California law.

0:15:00 Thomas: Yeah. So a couple of questions. For one, I'm seeing even in the law that they cite, so just going through, maybe we should go through the causes of action and do our best to see what you think. So in the first cause of action, declaratory relief under California labor code 925, I even see in the part that they are quoting, it says any provision of a contract that violates subdivision A, which was above, is voidable by the employee if a provision is rendered, blah, blah. So it doesn't say like the whole contract. And so the part A, we read it before, but employer shall not require an employee who primarily resides and works in California as a condition of employment to agree to a provision that would do either of the following, require the employee to adjudicate outside of California a claim arising in California or to deprive the employee of the substantive protection of California law with respect to a controversy arising in California.

0:15:22 Lydia: Up

0:15:45 MJ: And sort of important is E there. I'm looking at this too, but it says that the employee was not represented by counsel in negotiating venue. These were pretty sophisticated people involved here, right. You would assume that maybe they had a lawyer look at that.

0:16:03 Thomas: Very weird. Yeah, we called that out too. Like, why didn't she have a lawyer look it over? Like, come on.

0:16:08 MJ: Yeah, I mean, a lot of times people do just sign them, but the statute is pretty carefully drafted when you look at the language in it.

0:16:14 Thomas: So another question that might be nothing, but based on my reading of that A right there, is it requiring as a condition of employment if she was just like, hey, let's figure out an employment contract? Or would you imagine there has to be some more explicit like, Hey, you got to sign this or else, or is just the act of of agreeing to an employment contract you think that satisfies like that's a condition of employment kind of thing yeah

0:16:39 MJ: So this is something that we've disputed within New York. It's kind of like there has to be not, I mean, not that exact language, but there has to be consideration there. So forcing her to sign that as a kind of a condition of getting the job would be what it prohibits, right? So if she asked to change it and they said, no, that wouldn't be good for JonesWorks, but we don't have any allegation of that.

0:17:00 Thomas: That's kind of what I'm getting at like because I know a lot of these things it really depends on the people like some people are like hey I'm gonna drive a hard bargain on every clause of this contract and other people might be like oh yeah here's your employment contract it's basically you know this and this and okay let's sign it okay you know like some people don't even care and so I wasn't sure if there's room in that language I could see Steph Jones, having had absolutely no like motivation to try to pull one over on her here, like I think she just has a contract that's more based in New York law. And if it wasn't like a specific ask, like, hey, no, you need to agree to this or else. I just wonder if there's any play there, if it wouldn't really matter in the end.

0:17:39 MJ: I think that's a good, it's important to think about that, right, because they could look at that. My hunch is that every employee that works for JonesWorks signs a New York employee contract because they're based in New York. And that makes sense. I don't know this, but maybe the only other office is in L.A.

0:17:56 Lydia: I want to say I think they might have one other I think They might have a London OFFICE OR SOMETHING BUT

0:18:00 MJ: So if she was really hired and went out and kind of grew that office, as she's alleged, I think they've both alleged, then it makes sense that it was a New York contract. It is weird when companies very intentionally have different states law apply depending on the state. Right. So that, you know, the Florida choice of law when the company really doesn't have much of a presence in Florida just because they know that the non-compete is more enforceable under Florida law, that looks bad for the company. But JonesWorks requiring New York law when they are in New York or having that in their default contract makes sense. They probably have New York lawyers. They're based there. And there's case law that suggests that, you know, when you sign a contract that agrees to a certain state's law applying and you're kind of a sophisticated individual or employee and executive, then that state's law will apply. So I think this, I think, might be an issue that can't be decided on a motion to dismiss.

0:18:56 Thomas: Interesting. Now I have to ask you, because I just remember going through it. We get to paragraph 107. On or about March 17th, 2025, so three days before this filing, Abel unequivocally informed JonesWorks that she had elected to void the 2021 Employment Agreement's choice of law and form selection provisions that violated Section 925. I feel like, what?

0:19:16 MJ: Oh, wow.

0:19:17 Thomas: That cannot work. Like, you cannot get out of any of your obligations for a contract in the past because, yeah, because you're like, oh, I just saw that there's this technicality. That feels kind of bad faith to me.

0:19:17 Lydia: That's nonsense four years ago yeah

0:19:28 MJ: Well, that makes sense when we go back to the elements of that law, right? That one was they elected to void the provisions under that section. So they probably knew I

0:19:37 Lydia: Oh, so she was like, oh, I have to meet this I have two yeah

0:19:40 MJ: Have to meet that standard and I would love to see that communication like is that an email from an attorney to an attorney saying hey, we'd like to void that employment agreement

0:19:45 Thomas: Yeah. Yeah, it can go along with the HR investigation that Wayfarer started like

0:19:51 MJ: Yeah yeah yeah that's a good

0:19:53 Lydia: Years after the fact

0:19:53 Thomas: Way after everything. Yeah. Oh, boy, that seems silly. That's got to be silly, right? Is that really going to do anything?

0:19:59 MJ: I find that very silly

0:20:00 Lydia: Yeah crazy

0:20:01 Thomas: Because at this point, they're not even in the contract anymore. She's left.

0:20:05 MJ: Yeah, she breached that contract arguably first right so it's kind of ridiculous to say I'm going to void the agreement months after you've departed

0:20:09 Thomas: Just the choice of law. I'm going to void the choice-of-law agreement. It doesn't seem like it would work. Okay, so that first cause of action was all about, it seems like, just the choice of law, right, and again, maybe give your overall impression on that. I think it's reasonable in all fairness. She worked in California. She was employed in California if this is California law, I wouldn't see it as super unreasonable for this to be applied. I do think maybe she fucked up by not doing that until March 17, three days before this was filed. But it's not like crazy to me that this California law should kind of get her out of the choice of law. What's your overall feeling on that first cause of action?

0:20:46 MJ: Before you pointed out 107, I thought you know what she's got a strong argument for california law to apply but that must be a required element that has to be there has to be something about you can't do that after the

0:20:57 Thomas: Yeah, yeah, there must be. Yeah. For them to put that in there, like, you know, somebody was like, oh, this is one of the elements. Shit. All right.

0:21:05 Lydia: Hey, at least they're looking at the elements for this case as opposed to the New York case

0:21:08 MJ: Fact Oh, but that was so fun Yeah, I'm interested to see what the court does with all of these motions to dismiss.

0:21:18 Thomas: I wonder. I mean, I guess if I read B again, any provision of a contract that violates subdivisions is voidable by the employee. And if it, like, I guess there's nothing that tells you you have to do it before, but I don't, that seems crazy though. Like she's breached. They're out. They're not even under the obligations of the contract anymore.

0:21:30 Lydia: In a specific time period there yeah it's it has been terminated there is no longer a working relationship there

0:21:39 Thomas: Yeah. It feels like you would need to, I don't know. I don't know. Yeah. Okay. Well, that's, That's funny. That's interesting.

0:21:46 Lydia: Interesting

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0:21:53 Thomas: So the second one, violation of California labor code nine two five, this one was mostly about, oh,

0:21:59 Lydia: This is tied to the first one, right? So the declaratory relief, just asking them to declare that California law applies and should be brought in California, et cetera, et zebra. This is just related to that.

0:22:09 Thomas: Oh this is just getting attorney's fees instead of just the declaration.

0:22:13 MJ: Yeah, she's asking for that injunctive relief and then reasonable attorney's fees.

0:22:17 Thomas: Okay. I didn't. Yeah.

0:22:17 MJ: It's just a continuation.

0:22:16 Lydia: They're like going together. Yeah.

0:22:20 Thomas: Why is that two different causes of action? Why wouldn't you just say, well, whatever. I just would think that would be like, here's the cause of action. It's labor code 925. Here's what we want. Declaratory relief and attorney's fees. Yeah.

0:22:30 Lydia: Is that how, would you normally separate those two things? Like declaratory belief is like a distinct cause of action or as opposed to like an item under this violation of California labor code 925 and we want injunctive relief, declaratory relief and attorney's fees.

0:22:45 MJ: I don't know why they separated that out looking at it. We've got the violation and

0:22:49 Thomas: Are they trying to increase their cause ofaction count? Trying to pad the, yeah.

0:22:53 Lydia: Get an extra 15 minutes of lawyer time that they're going to get paid back.

0:22:56 MJ: I guess the first one they're specifically saying we want, you know, we want the court to say that this is void and the matter, you know, California law has to apply. And then in the second one, they're saying because because she's been forced to bring this, she's entitled to attorney's fees. I don't think she says that in the first one.

0:23:13 Thomas: Okay. Yeah. I guess that could be two different things. If it's like the second one is more about having to do this legal thing. All right. Okay. Fair enough.

0:23:23 Lydia: And is it something where, like, if a court is evaluating the cause of action, would they risk losing the declaratory relief if the judge felt that the attorney's fees, etc., or would he be able to sever it himself?

0:23:34 Thomas: Oh, like splitting them out. Like, yeah,

0:23:36 MJ: I think he would probably be able to do that, to separate that out.

0:23:40 Thomas: Yeah。 Because usually it's, isn't it like two different phases? It's like whether you prevail or not. And then it's kind of about what relief you get. And it's like, it's not usually kind of two separate things or no. Yeah.

0:23:48 MJ: Unless there's something in the statute. Yeah. I'm not sure why they would, that requires them to separate it out.

0:23:54 Thomas: But I got to say, if the point of this labor code 925 is, hey, how dare you make me bring this action to secure my rights? You're really undermined by like honor about March 17th, able unequivocally informed Jones works. Like, so you're trying to avoid the provision far after the contract's over and far after Jones. Yeah. Jones has sued her. So there's no way you can be like, Jones, you should have known that I would do this in the future. Therefore, attorney's fees. Like, that cannot be right. Like, there's No Way.

0:24:12 Lydia: You've been sued.

0:24:22 MJ: Yeah, I don'T understand why that would, it, that just doesn't seem remotely fair.

0:24:27 Thomas: Okay, good.

0:24:30 Lydia: We're not crazy. Crazy.

0:24:30 Thomas: I'm glad that's, yeah, that's just crazy.

0:24:30 MJ: I DON'T, yeah, I DON't, I Don'T even have a legal argument there. I'M just like, like, I don't know why that would be. Yeah.

0:24:35 Thomas: It's not easy to get attorney's feeds in general, right? It's usually pretty hard or depending on the statute, I guess, or whatever.

0:24:40 MJ: Unless the statute or contract allows it. I mean, you never get them unless the law specifically allows it, and that's why I think all of these cases are so interesting, really.

0:24:49 Thomas: Yeah. Third cause of action, more declaratory relief, restraints of trade. Does this even cite a code? Oh, it doesn't say to code at the top, but it does toward the bottom.

0:24:54 MJ: I thought this was really interesting because I don' t know how often this law is cited in California. I'd see, I mean it basically is a continuation of the first. The elements are almost the same, but she's saying that the contractual restraints unlawfully restrain her from pursuing lawful employment in her chosen field, right? And that's, she's basically basically saying she wouldn't be able to work in her chosen field of public relations because of this contract. So the contract, again, has to be void.

0:25:18 Lydia: And I was poking around a little bit because the way that I interpreted this code, this 16600 or whatever it is, and I was pretty firm about the non -solicitation thing, I was like, okay, I want to just make sure that I'm not losing my mind because that feels like a pretty significant thing for a California -based law firm to get wrong. So when I was looking it up a littlebit, it looks like there is not published opinion about this, but there have There have been some cases, specifically with like traveling nurses, that non -solicitation agreements court has found them to be unenforceable because that does significantly impact the ability for a traveling nurse to continue in their lawful profession, right? If they are not able to solicit clients, you know, then now they're just a traveling purse with no one to take care of.

0:26:10 Thomas: Yeah, but you have to be able to solicit clients that are already a part of whoever you're working. Like, they're not your clients, they are the clients.

0:26:16 Lydia: Not necessarily. But I think that they're saying that like that they they are they side with employees in particular trades if the non -solicitation agreement would necessarily affect their ability to continue their trade.

0:26:28 Thomas: Interesting.

0:26:29 Lydia: But it seems like it's still pretty much up in the air. And then also the other thing, too, that's kind of up inthe air is whether or not it throws out the entire contract. And it sounds like there might be a question there. And maybe in the next couple of years, we'll see something a little more firm out of California on that. But it is like a squishy area right now. So I just thought that was kind of interesting. I don't know that necessarily like a PR representative would be found unable to continue in her trade if she's not able to take clients from her previous company. I think that's reasonable. But I guess we'll see if they continue to argue that and how they go about doing that.

0:27:02 MJ: I think that you said that really well. I'm looking at it and that makes sense with the traveling nurses and it is hard to see it applied here, but maybe.

0:27:14 Lydia: Non -compete. Mm hmm. Yeah.

0:27:10 Thomas: So, this is, the 16600 is the actual 2024 non -compete one, right? So, for one, we covered this, but at the time of these contracts, this didn't exist. But fair enough I think it does affect all contracts before that which makes sense but in terms of just in termsof like mens rea I feel like you can't be too mad at Steph Jones for not knowing the law would change but also I wonder about this question because this language here the earlier one very specifically talked about specific provisions this one says in the code itself except as provided in this chapter oh I guess we could see what that is but every contract by which anyone is restrained from engaging in a lawful profession trade or business of any kind is to that extent void.

0:27:54 Thomas: Would you read that to just be like whatever that provision is?

0:27:55 Lydia: Well, the reason why I mentioned that piece, because I agree with you, the reading there, but I guess there is a subsection that was added that just took effect, I guess, very recently that's 16600 .5. And it says that other thing, you know, one of the statements is any contract that is void under this chapter is unenforceable regardless of where and when the contract was signed. And so they don't say provision or clause or element. Right.

0:28:24 Thomas: Interesting.

0:28:24 Lydia: They say specifically contract. So, so I guess that's, you know, based on the little bit of research I did here, I think that's why they're saying, like, it sounds like this is probably going to make its way up to California Supreme Court, because there's going to be a lot of questions around this in California coming up. And maybe we'll see some more definitive answers in the law in the next couple of years. Maybe Jen Abel is going to do it. That person.

0:28:45 Thomas: Yeah, that is

0:28:45 MJ: I mean, that was very well said. You sound like a very good lawyer. The legal tool I have summarizing the law basically says what you said. It says, as written, it renders void any contract restraining a person from engaging in a lawful profession trade or business that is what the resource says

0:29:02 Thomas: In its entirety, the whole thing. Huh.

0:29:04 Lydia: That's so crazy. Well, I guess to be determined on that.

0:29:08 Thomas: What's weird is like, that sounds like she has a far better argument on this one than the one earlier, but okay. Okay.

0:29:13 Lydia: Yeah. But again, I mean, like we are looking at time machine situation for that one, too. So I could see like a judge coming in on this like, yeah, you'd have a point if you were still subject to this contract. But your signing and it terminating this did not exist it did not apply and so like maybe you could have been an advocate for the change in california like you were so bothered by that yeah oh

0:29:33 Thomas: Oh, that's interesting. Yeah, yeah.

0:29:39 MJ: Right that's something that we're dealing with right now is if if we make non -compete agreements unenforceable does that mean all of the ones previously signed are not enforceable how do we deal with that so it's interesting it would be strange to say an entire contract is no longer enforceable because of one paragraph when the law has changed since since you've signed that contract.

0:30:00 Thomas: And not only that, B1, so 1600 B1 says for current employees, so that would have I guess kind of applied, and for former employees who were employed after January 1, 2022, whose contracts include a non -compete clause or who were required to enter a non complete compete agreement that does not satisfy an exception to this chapter, the employer shall, by February 14th, 2024, notify the employee that the non -compete clause or non - Compete Agreement is void. So, I mean, like, so if you notify them that just the non -Compete Clause was void, that would have been fine by February 13th, 2044. But if not, yeah, yeah,

0:30:30 Lydia: Well that's interesting because jen abel was still like they were in they were in good graces at that point

0:30:42 Thomas: Well, Steph Jones would have had to know to do that. And she's not a California employer, so maybe she didn't know. But I feel like, I don't know, if you run a tighter ship, you should know that your California -based location probably needs to keep an eye on that stuff, but I don't know.

0:30:53 Lydia: Yeah interesting the more we talk about this the more I'm actually kind of like aligning with jen able because like that that notice period

0:31:01 Thomas: Right. But I guess my point was in that provision, it splits out the clause. It does allow you to say the clause itself is void, but not the entire agreement.

0:31:02 Lydia: Right yeah I just mean Jen Abel's position that the non -compete was unenforceable at the time that she breached the contract. Yeah. No, I'm just saying I'm getting more on that side now as we are talking about this and stuff. I think that is more reasonable.

0:31:17 Thomas: Oh, I fully agree with that. Yeah. Gotcha.

0:31:25 MJ: Think there's a big difference too, between competing, like she could have gone and started a competing PR agency and not taken clients or not planned it while she was working there. And I think that's where, yeah, that's not competing, right? That is confidential information.

0:31:36 Lydia: Or using the documents that Jones Works developed for client engagement. Yeah, yeah,

0:31:44 MJ: That is the work product of her former employer. It's two very different things. And it's not like she just went to a competitor and was doing what they said. She She was actively planning, it looks like from these allegations, planning to go and take clients while she was still employed with JonesWorks. So, I mean, I think I've told you guys before, I don't like non -competes. I don'T like restrictions on people doing their job, but there's a big difference between competing legally and maybe doing things that you shouldn't be doing, right?

0:32:04 Thomas: Me neither. Yeah well,

0:32:13 MJ: So even though these things, maybe the non -compete is not enforceable, she still probably breached that contract, the non solicit, like there's other parts there that are probably stronger

0:32:19 Lydia: Yeah yeah agreed.

0:32:23 Thomas: Yeah, but the whole thing I've been trying to get at is, but if this California law says you you can void the entire contract. Would that somehow fix it for her? Let me sum it up and make sure I have it. And then you can tell me, because the more I think about it and put it all together, I would hope a judge would find this to be incredibly bad faith because you've got a contract that was written before this law even happened. It did say, hey, you have until now to advise that this provision would be void. It has one provision that violates this code. I suppose the other one violates a different code, maybe the choice of law, but complicating that is the the fact that she has to have requested it, you know, and she only did that in, you know, March 17th. So putting that all together, it's one clause. It was agreed to before that law was passed. It was not even the majority of the things she violated. Like it is one part of the first cause of action and breach, but there's, you know, to your point, confidential information, using confidential information to solicit, induce, et cetera, et cetera, soliciting, inducing, using, yeah, all that stuff, breaching her duty of loyalty. Guilty. So if she violated this contract, if she's in breach in so many different ways, and then she tries to argue to a judge here that, hey, but actually this one provision that never even really mattered, it never really even came up, you know, it barely came up by the time she was already in breach. Like she was уже in breach before the part where the non -compete would have even happened because this California law says in some parts of it that the whole contract could be void. Maybe I should be able to have retroactively been able to totally screw Stephanie Jones over because of that it just feels it feels really bad faith to me yeah

0:33:56 MJ: Yeah, I mean, it completely is. I hear her arguments if that is the way the law is applied. I see it and I hear it, but I do not think that whole contract is being thrown out because of this. That's kind of my opinion on how the law would apply here. Even if it says that, I do not see a judge doing that. I mean, maybe they will. And I guess in a case like this, sometimes there are victories that you don't expect to happen. And maybe Jen Abel could win on California law for the contractual issues here. I meantime, that is possible.

0:34:28 Thomas: Yeah I would have a hard time believing it so who

0:34:30 Lydia: I don't want that to be the world we live in, if that's how contracts are going to work.

0:34:33 Thomas: Knows yeah yeah fourth cause of action unfair competition California business and professions code 17200 so what's this one now yeah why is this different

0:34:42 MJ: We're just still talking about her using unfair contractual provisions. It's a different law. It is the same thing that the defendant engaged in an unlawful, unfair, unfair, fraudulent business act or practice. So they're saying that unlawful and unfair business practices are those contractual provisions and that she has, yeah, she has suffered injury and lost money because of it. This is another one I think where she's asking for, if you look at 134, Abel has lost money or property as a result. I'm not sure which money she's lost. Attorney's fees, I guess.

0:35:00 Thomas: I guess but well she would have solicited a whole lot more clients I don't know. Yeah. Yeah.

0:35:18 MJ: Yeah, that's a, this is weird to me. What injury did she have? What money did she lose? What property did she lose because that is how the law is written Yeah

0:35:26 Thomas: So that doesn't seem quite as strong there. All right. Fifth cause of action, violation of California Labor Code 432.5. This is that one that's pretty much just one paragraph that we read.

0:35:29 Lydia: Yeah. Oh, so this is the one where, yeah, this is the one like requiring her to sign any term or condition which is known by such employer to be prohibited by law is a violation. And I don't know. I mean, couldn't Stephanie Jones say that she wasn't, you know, this is not something that I would have known of. One didn't exist at the time of signing. And the other one is that the California forum and law applies.

0:35:59 MJ: That's exactly what you would say, right?

0:36:00 Lydia: And yeah, and her L.A. office was like brand new. We know that it was just starting. She only had four people out there. It likely hadn't been raised with any of those four people. So it could be just, yeah, a business expansion thing and not being aware of that California business code.

0:36:03 MJ: Yeah, yes, I don't think she had any idea, I mean it's very typical to not know that something is illegal in a contract, so I think this one is

0:36:21 Thomas: Yeah, because this one had the knowledge, which is known by such employer agent manager to be proven by law. Yeah, that seems terrible. Okay.

0:36:25 Lydia: I don't know how she would prove that. Yeah.

0:36:28 Thomas: So that's finally we got through those labor ones. So all right. Mixed bag, confusing. And it does seem like a new area of California law for some of it. So just on a fairness level, I really don't think you should be able to completely fuck over somebody because one provision that barely even mattered might have been unenforceable. And some parts of the California law say the whole contract goes away, but also not like directly.

0:36:31 MJ: Silly I

0:36:53 Thomas: It seems to be kind of indirect and other parts of it say the provision. So I just don't know about that. I just do not see it. I can see this being a great defense to that third component in Jones's first cause of action. The third component being 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. Sure. Great defense there, it seems to me, but getting out of the entire thing, I don't know.

0:37:20 MJ: Completely agree with that

0:37:29 Ad: [Ad break 3 — ad music]

0:37:29 Thomas: Well, we are going to have to cut it off there. There's more pod with MJ.

0:37:33 Lydia: Especially with the ones that we know are coming up, too.

0:37:36 Thomas: Yeah. Fun stuff to come. It's always just so much fun with MJ, so more with MJ morally. More of MJ morally next episode. So thanks for listening, everyone. And we'll dig into more of this next time.

0:38:10 MJ: Yeah, even though the choice of law is clear. Sorry, I was shaking my head at a child that is being quiet but dancing

0:38:12 Thomas: Oh, you're getting away from the mic a bit. Fair enough.

0:38:19 Lydia: Cute.

0:38:19 MJ: Um through a glass door to make me laugh it's the way that I'm reading it as well No,

0:38:23 Thomas: I have a question. Oh, sorry. Good.

0:38:25 MJ: Go ahead.

0:38:25 Thomas: No, finish your thought.

0:38:27 MJ: I am totally blanking on what my thought was. I'm sorry. No, you're good.

0:38:29 Thomas: Oh, no. Darn. Sorry. I shouldn't have blurted something.