Pay Equity in Massachusetts: What Every Lawyer Needs To Know

gabor_davidby David Gabor

Legal Analysis

Two significant changes affecting pay equity are on the horizon for Massachusetts employers. The first is a new Massachusetts law, An Act to Establish Pay Equity (the “Act”), effective July 1, 2018.  The Act rewrites section 105A of G. L. c.149 (“section 105A”), which prohibits discrimination based on an employee’s sex in the payment of wages. The second change is issuance of a revised Employer Information Report (“EEO-1”), effective March 31, 2018.  The EEO-1 is a form that that private employers and federal contractors must file annually with the U.S. Equal Employment Opportunity Commission (“EEOC”) that provides company employment data by job category, race/ethnicity, and gender.  The EEOC uses the data to examine employment patterns and assist its enforcement of anti-discrimination laws.  Counsel can take a number of steps to prepare clients for the changes embodied in the Act and the revised EEO-1.

I. An Act to Establish Pay Equity

A. Basic Provisions.

Section 105A(c) as revised by the Act contains three basic requirements: (i) employers may not inquire about an applicant’s salary or benefits history before extending an employment offer that contains compensation terms; (ii) employers may not prohibit employees from talking to their co-workers about wages or benefits; and (iii) employers must pay women based on competitive market rates and not salary history.  Those changes are premised on the theory that using salary history disadvantages those who have been the victim of past pay discrimination.

Section 105A(b) inserted by the Act provides an exception to the equal pay requirement if there is a legitimate business reason to pay a man more than a woman (e.g., a bona fide seniority system; a bona fide merit system; a bona fide system that measures productivity; geographic location; education, training or experience; or travel).  Employers still should consider reviewing their pay systems for gender bias to ensure that exceptions, if applied, are not discriminatory.

Under new section 105A(d), an affirmative defense to claims of pay inequality is available to employers who perform a good faith self-evaluation of their pay practices that is reasonable in detail and scope at least once every three years.  The employer must also be able to demonstrate reasonable progress in addressing any disparity identified during a self-evaluation.  Corrective action may not, however, include lowering one individual’s salary to correct an identified disparity.

As with most employment statutes, the Act prohibits retaliation against a person who has engaged in a protected activity.  Accordingly, employers must protect from retaliation employees who file complaints or participate in an investigation or litigation.  Many practitioners believe that retaliation is the easiest form of discrimination to prove because it can often be demonstrated through timing.  Retaliation can be established through a “but/for” test to determine whether an adverse action took place under the Act within a close temporal proximity to the protected activity.

B. Steps Clients Should Take.

Lawyers should encourage clients to begin compliance efforts by performing a self-audit to identify any instances of pay disparity. Depending on the results, clients may then revise their policies, processes, and written materials and online applications, and conduct appropriate training prior to the Act’s effective date.

Self-audits require a careful review of compensation structures to identify pay disparities between positions that are similar in title or function and which involve “comparable work.”  An analysis of pay practices should be conducted even if there is no evidence of overt gender bias, because pay structures can unwittingly become misaligned over time.

Clients may need assistance to determine whether any disparity is unlawful, or the product of a legitimate business exception that is objective and reasonable.  If a disparity is unlawful, corrective action must be taken promptly. If a legitimate reason for the disparity exists, it should be carefully vetted. A disparity based on merit or productivity should be validated using reliable metrics, and the findings should be carefully documented.  An analysis of the business exceptions can not only be used to demonstrate compliance with the Act, but may provide an opportunity to identify and address other potential issues, such as other forms of employment discrimination.

The next challenge for lawyers and clients is determining appropriate corrective actions for pay disparities that do not qualify for legitimate business exceptions. Corrective actions must also demonstrate reasonable progress in eliminating pay inequities, including mechanisms to ensure that disparities do not arise in the future.  Solid documentation of corrective action plans and progress in eliminating pay disparity is critical to demonstrating compliance with the Act.

In addition to conducting a self-audit and implementing corrective actions, employers should take prompt steps to review and revise other employment practices such as the recruitment of new employees.  Employers can remove requests for salary information from on-line and written applications and instruct recruiters and hiring managers not to request salary information from applicants or during reference checks.

Lawyers should also advise their clients to review all employee materials (e.g., handbooks and manuals, offer letters, etc.) to eliminate language that might discourage employees from talking about pay or benefits with co-workers.  Furthermore, these changes should be communicated to employees, and any required notices must be posted when they become available. Documenting such efforts also helps demonstrate good-faith compliance with the Act.

Training employees involved in the onboarding process about what they can and cannot ask during interviews is another critical compliance step.  Such training can be coordinated with periodic equal employment opportunity and best practices training, and should be carefully documented.

Lawyers should also be aware that proposed corporate changes, such as a merger or acquisition, may warrant additional review in light of the Act. Suppose, for example, that when pay scales are reviewed prior to a merger, it becomes apparent that men at Company A are paid $100,000 a year, and for the comparable job, women at Company B are paid $60,000.  The parties involved in the merger must decide if the merger still makes sense taking into consideration corrective actions that may be necessary to eliminate pay disparities.   How, for example, will such corrective measures impact the potential profitability of the merger?

By encouraging clients to implement these changes now, lawyers can help ensure that clients are fully aware of the Act and fully compliant before the Act goes into effect.

II. Changes to the EEO-1

A. Summary of Revisions.

The revisions to the EEO-1 are designed to capture detailed data about employees and wages that will enable the EEOC to improve its analysis of, and address, pay disparities based on discrimination against members of protected classes.  For example, the revised EEO-1 differentiates ten job categories and seven categories of “race/ethnicity.”  Employers might consider using some of the analytical methods recommended above to examine employment practices with respect to protected classes.

The reporting requirements of the revised EEO-1 are extensive.  Effective March 31, 2018, employers with 100 or more employees will need to provide summary pay data, including the total number of annual hours that full- and part-time employees work, in each of the twelve pay bands listed for each EEO-1 job category.  Employers must also report the aggregate hours worked by all employees in each pay band.  For 2018 filings, the 100-employee threshold is met if the employer has 100 or more full- or part-time employees during any pay period between October 1 and December 31, 2017.

Summary pay data required on the revised EEO-1 include the Form W-2 Box 1 earnings for all employees identified in the selected pay period, including employees who no longer work for the company at year’s end.  Summary pay data do not include income earned at the end of 2017 but paid in 2018.  Employees’ hours counted during a pay period must be reported as an aggregate value for each job category and pay band (i.e., the total hours worked during that year by all employees reported in that job category and pay band).  For non-exempt employees, employers must count the actual hours worked.  Exempt employees are credited with 40 hours per week for full-time employees or 20 hours per week for part-time employees.  Exempt employees’ hours are multiplied by the number of weeks that they were employed during the year.

The filing deadline for the Form EEO-1 has changed from September 30th to March 31st.  This change makes it possible to coordinate such mandated reporting with year-end income reporting.

B. Steps Clients Should Take.

Clients required to file the revised EEO-1 form should begin developing processes to collect the required data.  Implementing such processes will require careful coordination between the human resources department, the human resource information system, and the payroll department (or payroll vendor).  Such processes should be tested well ahead of the compliance date to ensure that information is captured accurately.

Lawyers should promptly begin to assist clients with analysis of the data that will be submitted on the revised EEO-1.  Delaying that analysis could limit an employer’s ability to develop, implement, and document necessary corrective actions.

Employers can use 2016 Form W-2’s to create a mock EEO-1.  Lawyers and their clients can then review the mock EEO-1 just as the EEOC would: to identify pay disparities that may lead to an investigation and possibly litigation.  To the extent the data suggests that a pay disparity exists, employers can compile evidence to demonstrate the legitimate reason(s) for the pay differential.  Such evidence may include records of a seniority system, merit pay, or productivity-based compensation.

Employers should also consider applying some of the steps recommended above for compliance with the Act to an analysis of all protected classes identified on the revised EEO-1.  Such an analysis may reveal the need to create new company policies, modify existing policies, provide training to management, and create programs to help develop job skills for employees in protected classes.

III.      Conclusion

            By encouraging employer clients to take the steps described in this article now, counsel can help ensure that potential issues of pay inequality are identified and corrected prior to the effective date of the changes implemented by the Act and the revised EEO-1.  Such steps may also enable employers to identify and remediate other potential claims of discrimination before they become problematic.

David G. Gabor is a partner with The Wagner Law Group, PC. His practice focuses on employment law and human resources matters.


Applying the Exclusionary Rule in the Face of Changing Law


haskell_eric
by Eric Haskell

Legal Analysis

Massachusetts courts applying the state Constitution have declined to adopt wholesale the federally created “good faith” exception to the exclusionary rule, instead crafting their own approach to exclusionary rule exceptions.  This article identifies one application of the federal “good faith” exception that is in harmony with Massachusetts’ approach: where a search complied with then-existing law when it was undertaken but, before the validity of the search is litigated, the law changes in a way that would retroactively make the search unlawful.

Although no Massachusetts court has definitively spoken to this issue, the question is likely to arise soon.   This is because, as personal-communications and information technology continues to develop, courts are issuing decisions that change what had previously been the settled understanding of search-and-seizure law.  Compare 18 U.S.C. § 2703(d) (1986) (unless barred by state law, police may obtain order for non-content records concerning electronic communications if records are “relevant and material to an ongoing criminal investigation”) with Commonwealth v. Augustine, 467 Mass. 230 (2014) (Augustine I) (police must obtain warrant supported by probable cause to obtain certain cellular tower location records even though “neither the statute, 18 U.S.C. § 2703(d), nor our cases have previously suggested that police must obtain a search warrant”); compare Commonwealth v. Phifer, 463 Mass. 790 (2012) (permitting warrantless search of arrestee’s cellular telephone) with Riley v. California, — U.S. —, 134 S. Ct. 2473 (2014) (requiring warrant to search arrestee’s cellular telephone).  Each such decision results in a class of searches that were valid when undertaken, but would be deemed invalid under the new law.

The Limits of the Exclusionary Remedy, the Federal “Good Faith” Exception, and Massachusetts’ Approach to Exclusionary Rule Exceptions

Both the federal and Massachusetts Constitutions prohibit unreasonable searches and seizures, but neither prescribes a remedy for one.  See generally U.S. Const. amend. IV; Mass. Const. pt. 1, art. XIV.  So, both federal and Massachusetts courts have developed the “exclusionary rule,” which provides generally that unlawfully obtained evidence must be suppressed from use in a criminal case.

Application of the exclusionary rule, however, comes at a cost:  “It almost always requires courts to ignore reliable, trustworthy evidence bearing on guilt or innocence . . . [a]nd its bottom-line effect, in many cases, is to suppress the truth and set the criminal loose in the community without punishment.”  Davis v. United States, 564 U.S. 229, 237 (2011); People v. Defore, 242 N.Y. 13, 21 (1926) (Cardozo, C.J.) (famously questioning whether “[t]he criminal is to go free because the constable has blundered”).  For that reason, both federal and Massachusetts courts have insisted that the exclusionary rule be applied only if the benefits of suppression outweigh the costs.  E.g., Herring v. United States, 555 U.S. 135, 140-141 (2009); Commonwealth v. Santiago, 470 Mass. 574, 578 (2015).

Under federal law, this weighing of costs and benefits led to the development of the “good faith” exception, beginning with United States v. Leon, 468 U.S. 897 (1984).  In Leon, police executed a search warrant that had been approved by a state court judge but, in the ensuing federal prosecution, the federal court held that the warrant was not supported by probable cause.  The Supreme Court concluded that suppression was inappropriate because the officers executing the warrant had an objectively reasonable good-faith belief that the search was lawful.  The Court reasoned that the only legitimate purpose of the exclusionary rule is to deter police from committing future unlawful searches, and that “[p]enalizing the officer for the magistrate’s error . . . cannot logically contribute to the deterrence of Fourth Amendment violations.”  Id. at 921.

Massachusetts courts applying the state Constitution have declined to adopt Leon. See, e.g., Commonwealth v. Valerio, 449 Mass. 562, 568-569 (2007); Commonwealth v. Pellegrini, 405 Mass. 86, 91 n.6 (1990).[1]  Moreover, in contrast with Leon, Massachusetts courts have defined the permissible purposes of the exclusionary rule more broadly than the U.S. Supreme Court has done.  The Massachusetts exclusionary rule, like its federal counterpart, rests on a “foundation” and “primary purpose” of deterring future police misconduct.  Santiago, 470 Mass. at 578; Commonwealth v. Wilkerson, 436 Mass. 137, 142 (2002).  But Massachusetts law identifies a second purpose of the Massachusetts exclusionary rule that does not appear in federal doctrine: to “preserve judicial integrity by dissociating courts from unlawful conduct.”  Commonwealth v. Nelson, 460 Mass. 564, 570-571 (2011); Commonwealth v. Gomes, 408 Mass. 43, 46 (1990) (applicability of exclusionary rule affected by extent to which violation undermines governing rule of law); Commonwealth v. Perez, 87 Mass. App. Ct. 278, 283 (2015) (same).  Accordingly, the logic and reach of the federal “good faith” exception is different from Massachusetts’ approach to exclusionary rule exceptions.

Application of the Exclusionary Rule When a Search Complied with Then-Existing Law that Is Later Overturned

In the federal system, it was only a small step to extend Leon’s logic to a search that complied with then-existing law when it was undertaken, but that would retroactively be deemed unlawful based on a subsequent change in the law (either by statutory amendment or judicial decision).  See Illinois v. Krull, 480 U.S. 340 (1987) (no suppression where warrantless administrative search was authorized by state statute, even though statute was later found unconstitutional); Davis v. United States, 564 U.S. 229 (2011) (no suppression where warrantless automobile search was authorized by Supreme Court precedent, even though that precedent was later overruled).  In those decisions, the Supreme Court framed the issue as one of “good faith” under Leon.  It also noted that the retroactivity of the new law does not mandate exclusion because retroactivity concerns whether a constitutional violation has occurred—not the remedy for any such violation.  See Davis, 564 U.S. at 243-244 (“[T]he retroactive application of a new rule of substantive Fourth Amendment law raises the question whether a suppression remedy applies; it does not answer that question.”) (emphasis in original).

Massachusetts appellate courts have twice encountered such a situation, with equivocal results.

In Commonwealth v. Miller, 78 Mass. App. Ct. 860, 864-865 (2011), the Massachusetts Appeals Court, in dicta, explicitly endorsed an exception to the exclusionary rule where police officers comply with then-existing law.  There, a State Trooper made a traffic stop because the words “Spirit of America” on the defendant’s license plate were obscured, a circumstance the Trooper believed to be prohibited by a Registry of Motor Vehicles regulation.  The defendant sought to suppress evidence obtained in the ensuing encounter, arguing that the regulation was invalid because it exceeded the scope of the RMV’s rulemaking authority under the relevant statute and thus could not be used to justify the stop.  The Appeals Court first observed that, even if the regulation were deemed invalid, the fruits of the stop would nevertheless be admissible:  “[W]hen a police officer objectively and reasonably relies on an act of another government body (such as a legislative enactment or agency records) and the actions of that government body are later determined to be incorrect or invalid, evidence obtained by the otherwise proper actions of the police need not be suppressed.”  Id. at 864-865.  The court went on, though, to determine that the defendant had not violated the regulation, and accordingly found the traffic stop to have been unjustified.

On the other hand, in Augustine I, 467 Mass. at 254, the SJC implicitly rejected an exception where police officers comply with then-existing law.  There, the court held for the first time that a search warrant was required to obtain certain cellular tower location records, notwithstanding that a federal statute (with which the police had complied in their investigation) required a lesser showing.  The SJC remanded the case for determination whether probable cause to support a warrant would have existed, observing that suppression “should be allowed” if probable cause were lacking.  Id. at 256.[2]  The court made that observation, however, without analyzing or articulating a holding as to the applicability of the exclusionary rule, even though that issue had been briefed by the parties.

How will the Massachusetts appellate courts rule in a case that squarely presents the issue of whether the exclusionary rule applies when a search complied with then-existing law, even if that search would retroactively be deemed unlawful?  This author believes that Massachusetts’ broad view of the purposes of the exclusionary rule supports an exception where police officers comply with then-existing law.

Deterrence of future police misconduct—the exclusionary rule’s primary purpose under Massachusetts law and sole purpose under federal law—does not support suppression of evidence obtained through a search that complied with then-existing law, even if later changes would retroactively make the search unlawful.  See, e.g., Davis, 564 U.S. at 241 (“About all that exclusion would deter in this case is conscientious police work.”); Wilkerson, 436 Mass. at 142 (where officer “did nothing wrong, there is no unlawful conduct for exclusion of the evidence to deter”).  But, while a lack of deterrent value may be necessary to support an exception to the exclusionary rule, it is not sufficient under Massachusetts law.  It can be said with equal force that suppression of the fruits of a Leon-type search (i.e., one authorized by a facially valid, but actually insufficient, warrant) serves no deterrent purpose—yet the Massachusetts courts have declined to apply an exception for a Leon-type search.  So a lack of deterrent value cannot alone be determinative.

Massachusetts law, unlike federal law, recognizes a second purpose of the exclusionary rule: the interest in dissociating the courts from unlawful conduct and not undermining the governing rule of law. This second purpose supports suppression of a Leon-type search authorized by a facially valid (but actually insufficient) warrant:  No law authorizes such a search and, when the warrant is reviewed through adversarial litigation, it will be deemed contrary to governing law.

This second purpose, however, does not support suppression where a search complied with then-existing law.  As the SJC has previously observed, it does no violence to judicial integrity to admit evidence that was “properly obtained” under the law that governed the search.  See Commonwealth v. Brown, 456 Mass. 708, 715 (2010) (“judicial integrity . . . is hardly threatened when evidence properly obtained under Federal law, in a federally run investigation, is admitted as evidence in State courts,” even though that evidence was obtained in manner that would have been impermissible under Massachusetts law).  To the contrary, it may well harm the governing rule of law and diminish public confidence in the justice system to exclude such evidence based solely on the fortuitous timing of an intervening change in the law.

Thus, even though the federal rubric of “good faith” is inapposite for the reasons described earlier, this author believes that Massachusetts’ approach to the exclusionary rule independently supports an exception where police officers comply with then-existing law, regardless of subsequent changes to the law.

[1] In some cases involving arrests wrongly made on the basis of mistaken information chargeable solely to the police, Massachusetts courts have inquired into whether the search-and-seizure violation is “substantial and prejudicial” in determining whether to suppress evidence seized in the encounter.  See generally Commonwealth v. Maingrette, 86 Mass. App. Ct. 691, 697-698 (2014) and cases cited therein.  Application of this test, however, appears to be limited to such cases.  Id.

[2] On remand, a Superior Court judge found that there was no probable cause and ordered suppression of the records.  On the Commonwealth’s interlocutory appeal from that order, the SJC reversed the finding of no probable cause.  Commonwealth v. Augustine, 472 Mass. 448 (2015) (Augustine II).

Eric Haskell is an Assistant Attorney General in the Criminal Bureau of the Attorney General’s Office, and a member of the BBJ Board of Editors.  This article represents the opinions and legal conclusions of its author and not necessarily those of the Office of the Attorney General.  Opinions of the Attorney General are formal documents rendered pursuant to specific statutory authority.


The Defend Trade Secrets Act of 2016 and Its Coexistence with Massachusetts Law

chow_steveby Stephen Y. Chow

Legal Analysis

The Defend Trade Secrets Act of 2016 (“DTSA”) creates a federal private right of action for misappropriation of trade secrets — hitherto the province of state unfair competition law.  It now provides original federal court jurisdiction for these questions, as for infringement of other “intellectual property” such as patents, copyrights and federally-registered trademarks.  However, the jurisdiction is not exclusive, and the DTSA does not preempt state trade secret law, raising questions about the coexistence of the DTSA and Massachusetts law governing trade secrets.  This Article explains salient aspects of the DTSA and differences from Massachusetts law that may be considered in asserting either or both.

I.Highlights of the DTSA

The DTSA has four important aspects:

  • The DTSA allows “owners” to sue for “misappropriation”[1] of “trade secrets” that are “related to a product or service used in, or intended for use in, interstate or foreign commerce.” 18 U.S.C. § 1836(b)(1). For purposes of the DTSA, a trade secret is “all forms and types of financial, business, scientific, technical, economic, or engineering information . . . if—(A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.”  18 U.S.C. § 1839(3).
  • Courts may issue ex parte orders of “the seizure of property necessary to prevent the propagation or dissemination of the trade secret.” 18 U.S.C. § 1836(b)(2).
  • Courts may issue injunctions to prevent “actual or threatened misappropriation,” provided that the order does not:

“(I) prevent a person from entering into an employment relationship, and . . . conditions placed on such employment shall be based on evidence of threatened misappropriation and not merely on the information the person knows; or

“(II) otherwise conflict with an applicable State law prohibiting restraints on the practice of a lawful profession, trade, or business.”  18 U.S.C. § 1836(b)(3)(A)(i).

  • “Whistleblowers” are given immunity from federal or state trade secret suits for confidential disclosures made to government or the courts “solely for the purpose of reporting or investigating a suspected violation of law,” without otherwise preempting existing state law remedies for misappropriation of trade secrets. 18 U.S.C. §§ 1833, 1838.

II. What Is “Misappropriation” of “Trade Secrets”?

Massachusetts has not enacted the UTSA (enacted by 47 other states), which is the basis for the DTSA’s definition of “misappropriation” (see note 1).  Instead, M.G.L. c. 93, § 42, provides:

Whoever embezzles, steals or unlawfully takes, carries away, conceals, or copies, or by fraud or by deception obtains, from any person or corporation, with intent to convert to his own use, any trade secret, regardless of value, shall be liable in tort. . . .

(Emphasis added.)  “Trade secret” is defined in M.G.L. c. 266, § 30(4), as

anything tangible or intangible or electronically kept or stored, which constitutes, represents, evidences or records a secret scientific, technical, merchandising, production or management information, design, process, procedure, formula, invention or improvement.

(Emphasis added.)

In the decade following enactment of those provisions, the Supreme Judicial Court embraced Section 757 of the 1939 Restatement of Torts and its principles for defining “trade secrets” in its comment b.  Today, Massachusetts courts apply Section 757 as equivalent to those two statutory provisions.[2]

Massachusetts federal district courts have tested for trade secret “misappropriation” by asking if the defendant “used improper means, in breach of a confidential relationship, to acquire and use that trade secret.”[3]  However, as shown in the following table setting forth its text and that of the DTSA for comparison (emphases added), Section 757 recognizes some misappropriations that do not require acquisition by improper means.[4]  The DTSA adds a distinct misappropriation of acquisition by “improper means” without requiring “use.”

1939 Restatement § 757 DTSA, as codified in 18 U.S.C. § 1839(3)
the term `misappropriation’ means–

(A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

One who discloses or uses another’s trade secret, without a privilege to do so, is liable to the other if (B) disclosure or use of a trade secret of another without express or implied consent by a person who–
(a) he discovered the secret by improper means, or  (i) used improper means to acquire knowledge of the trade secret;
(ii) at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was–
(b) his disclosure or use constitutes a breach of confidence reposed in him by the other in disclosing the secret to him, or (II) acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret; or
(c) he learned the secret from a third person with notice of the facts that it was a secret and that the third person discovered it by improper means or that the third person’s disclosure of it was otherwise a breach of his duty to the other, or (I) derived from or through a person who had used improper means to acquire the trade secret;

(III) derived from or through a person who owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade secret; or

(d) he learned the secret with notice of the facts that it was a secret and that its disclosure was made to him by mistake. (iii) before a material change of the position of the person, knew or had reason to know that–

(I) the trade secret was a trade secret; and

(II) knowledge of the trade secret had been acquired by accident or mistake;

1939 Restatement § 757 cmt. B DTSA, as codified in  18 U.S.C. § 1839(3)
A trade secret may consist of any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. . . . [I]t is not simply information as to single or ephemeral events in the conduct of the business. . . . A trade secret is a process or device for continuous use in the operation of the business. . . . Some factors to be considered in determining whether given information is one’s trade secret are: . . .

(5) the amount of effort or money expended by him in developing the information;

the term “trade secret” means all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—
(3) the extent of measures taken by him to guard the secrecy of the information; (A) the owner thereof has taken reasonable measures to keep such information secret; and
(1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business;. . . (4) the value of the information to him and to his competitors; . . .and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others (B)  the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information

As the table above shows the DTSA does not maintain a continuous-use requirement.[5]  (Some Massachusetts decisions have applied that requirement of continuous use to dismiss misappropriation claims that did not allege current use by the plaintiff, even where the plaintiff alleged it had been put out of business by the misappropriation.[6])  Notwithstanding that difference, both comment b and the DTSA focus on reasonable protection of non-public information of economic value.

The DTSA, more clearly than Massachusetts law, protects information that is not currently used by the “owner,” as well as information acquired by improper means, but not currently used by the defendant.

III. Remedies for Misappropriation

Another significant difference between Massachusetts trade secret law and the DTSA is the remedies that are available.

Under Massachusetts law, a trade secret plaintiff may recover its direct damages (primarily lost profits) — potentially doubled under M.G.L. c. 93, § 42 — but not restitution (value to the defendant) or reasonable royalties (unless lost profits cannot be shown).[7]  It is uncertain if injunctions may be granted against inchoate use of trade secrets.  (See note 3.)

In contrast, under federal law, a trade secret plaintiff may now recover in more ways than under Massachusetts law:

First, it may recover a non-duplicative combination of direct damages and unjust enrichment (restitution) or, alternatively, reasonable royalties.  See 18 U.S.C. § 1836(b).  Any of those remedies may be trebled, and the court may award attorney’s fees as well.

Second, it can get an injunction.  Under the DTSA, except for employee protection, a court may enter an injunction “to prevent any actual or threatened misappropriation.” 18 U.S.C. § 1836(b)(3).

Third, it can get ex parte seizure of the misappropriated property.  For this remedy, found in 18 U.S.C. § 1836(b)(2), a plaintiff must produce a verified application, among other things, specifying the property and its location and showing why other procedures (such as an ex parte temporary restraining order under Fed. R. Civ. P. 65) are inadequate.  Ex parte seizure under section 1836(b)(2) is permitted “only in extraordinary circumstances” and only after the court considers protections for third parties and the target party, including a post-seizure hearing and wrongful seizure remedies.  As such, it seems unlikely that the provision will be applied often.

IV. Employee Protection

The DTSA includes two significant protections for employees, who make up a large proportion of the defendants in trade secret cases (see note 4).

First, “to protect employee mobility,” the limitations quoted in section 1 prevent DTSA injunctions from (1) applying the “inevitable disclosure doctrine” (which bases a noncompetition injunction on the notion that a former employee will “inevitably” misuse his or her former employer’s trade secrets in new competitive position benefiting from those secrets) or (2) interfering with state laws limiting the enforceability of non-competition agreements and similar limits on employment (such as California’s broad prohibition on noncompetition agreements).[8]  Massachusetts courts are divided on the applicability of the inevitable disclosure doctrine.[9]  Concurrent assertion of the DTSA, which clearly rejects the doctrine, should not affect application under Massachusetts law, except perhaps tipping against such application by focusing on definitions of “trade secrets” that do not clearly include mental information that might be inevitably used,[10] compared to the broader definition at UTSA § 1(4).

Second, whistleblowers received immunity for disclosures to the government of “a suspected violation of law.”  Title 18 U.S.C. § 1833(b)(3)-(4) requires “notice of the immunity [be given] . . . in any contract or agreement with an employee that governs the use of a trade secret or other confidential information,” including “any individual performing work as a contractor or consultant for an employer.”  If that notice is not given, the employer cannot receive treble damages or attorney’s fees in a DTSA action.  Employers should therefore provide the notice, even if by cross-reference to a policy document (which federal law permits).

V. Conclusion

The DTSA does not alter how to protect proprietary information in Massachusetts — reasonable measures are still required — but, importantly, does provide clearer protection for proprietary information not currently used and against threatened wrongful use.  It also provides the possibility of ex parte seizure and greater potential in damages.

Moreover, with a broad jurisdictional grant without a threshold amount, claims under the DTSA provide easy access to federal court and the broad interstate discovery in federal-court proceedings.  Claims under the DTSA may also be asserted in state court, but some of the federal-court procedures, such as ex parte seizure, may require adaptation.

[1] The DTSA definition of “misappropriation” drew from the definition used in the 1979/85 Uniform Trade Secrets Act (“UTSA”), available at http://www.uniformlaws.org/shared/docs/trade%20secrets/utsa_final_85.pdf (visited Jan. 10, 2017).  Compare 18 U.S.C. § 1839(5), with UTSA § 1(2) (“misappropriation”); compare also 18 U.S.C. § 1839(6), with UTSA § 1(1) (“improper means”).  However, the DTSA term is applied to a “trade secret” and “owner” as defined by the Economic Espionage Act of 1996, 18 U.S.C § 1839(3) and (4), which are more consonant with the criminal targets of that statute, id. §§ 1831 and 1832, than with the civil unfair competition targets of the UTSA (which eschewed the concept of an “owner” and applies to more general “information” than the EEA “types”).

[2] E.g., Jet Spray Cooler, Inc. v. Crampton, 361 Mass. 835, 840 (1972) (citing Restatement (First) of Torts § 757 cmt. b (Am. Law Inst. 1939)). See Incase Inc. v. Timex Corp., 488 F.3d 46, 52 n.10 (1st Cir. 2007) (“The statutory and common-law claims may be essentially equivalent.”).

[3] E.g., Infinity Fluids, Corp. v. General Dynamics Land Sys., 2016 U.S. Dist. LEXIS 134613 at *26 (D. Mass. 2016).  Massachusetts cases are split on whether actual, current “use” is required for misappropriation; the Supreme Judicial Court has declined to address the issue.  See Lightlab Imaging, Inc. v. Axsun Tech., Inc., 469 Mass. 181, 186-87 (2014),

[4] Most trade secret cases involve “breach of confidential relationship,” where information is properly acquired by employees or business associates, but its use allegedly exceeds  limits permitted by the relationship.  See Almeling, et al., A Statistical Analysis of Trade Secret Litigation in State Courts, 46 Gonz. L. Rev. 57 (2010).

[5] The UTSA (which, again, Massachusetts has not enacted) also lacks a continuous-use requirement.  A comment to the UTSA explains that such a requirement “extends protection to a plaintiff who has not yet had an opportunity or acquired the means to put a trade secret to use.”  UTSA § 1(4), cmt.

[6] E.g., Portfolioscope, Inc. v. I-Flex Solutions Ltd., 473 F. Supp. 2d 252, 255 n.6 (D. Mass. 2007).

[7] Jet Spray Cooler, note 2 supra; Curtiss-Wright Corp. v. Edel-Brown Tool & Die Co., 381 Mass. 1 (1980).

[8] Cal. Bus. & Prof. Code § 16600.

[9] Compare Safety-Kleen Sys., Inc. v. McGinn, 233 F. Supp. 2d 121, 125 (D. Mass. 2002) (inapplicable as threatened use), with U.S. Elec. Serv., Inc. v. Schmidt, 2012 U.S. Dist. LEXIS 84272 (D. Mass. 2012) (applicable for irreparable injury, not likelihood of success), with Corporate Tech., Inc. v. Harnett, 943 F. Supp. 2d 233 (D. Mass. 2013) (applicable for likelihood of success).

[10] Consider the theft-and-conversion language of Chapter 93, Section 42 and the EEA crimes against “owners” (note 1 supra).  Can one “own” what is in another’s memory, experience and skills?

Stephen Y. Chow, Burns & Levinson LLP, litigates technology disputes, prosecutes patent applications, and develops technology policies, strategies and licenses.  He has been a Massachusetts Uniform Law Commissioner since 1994.


A “New Way of Doing Business” Under the Public Records Law

albano_jonhall_emmaby Jonathan M. Albano and Emma D. Hall

Legal Analysis

On June 3, 2016, Governor Baker signed into law House Bill No. 4333, An Act to Improve Public Records (St. 2016, c. 121) (the “Act”).  Described by the Governor as a “new way of doing business,” the Act is the first major overhaul of Massachusetts’ Public Records Law since 1973.  The new law is intended to improve access to public records, address administrative challenges faced by records custodians (particularly municipalities) responding to expansive public records requests, and promote cooperation between requestors and custodians.  Among the most significant new requirements, which will take effect on January 1, 2017, are:

  • Custodians of public records must designate a “public records access officer.”
  • Digital records are to be produced whenever available.
  • New statutory deadlines for responses to requests.
  • New limits on fees for producing records.
  • Availability of attorney’s fees and punitive damages.

The new law also requires the Supervisor of Public Records of the Office of the Secretary of the Commonwealth to create forms, guidelines, and reference materials to assist public records requests and responses.  Act, § 7, inserting G.L. c. 66, § 1A.  The Supervisor’s current regulations are being updated to reflect the new law.  (See Proposed 950 CMR 32.00).  This article summarizes several significant provisions of the new law.[1]

Impetus for the New Public Records Law

The new Public Records Law was passed on the heels of a report card by the Center of Public Integrity that gave the Commonwealth a D+ for government accountability and transparency.  The report found that “routine records, from agency emails to internal datasets, can take weeks or months to obtain from state agencies, at costs running from a few hundred dollars to the not-unheard-of multi-million-dollar bills sent to some requesters.”  Critics also complained that the law does not apply to the courts or the legislature, and argued that the statutory exemptions for certain agency records hindered government oversight.  Agencies and municipalities, in contrast, expressed concerns about overly burdensome records requests and insufficient personnel and technical support to manage the process efficiently.  The new law focuses on administrative and procedural aspects, and leaves largely unchanged the categories of documents and entities subject to the law.

Requirements for Making a Public Records Request

Under the new law, records custodians must respond to a request only if:

  • the request reasonably describes the public record sought;
  • the public record is within the possession, custody or control of the agency or municipality that received the request; and
  • the custodian receives payment of a reasonable fee as set forth in subsection (d).

Act, § 10, amending G.L. c. 66, § 10(a).

Under the old law, a request could be in oral or written form.  Written requests were recommended if there was substantial doubt as to whether the records requested were public, or if an appeal was contemplated.  See 950 CMR 32.05(3).  The Supervisor’s proposed regulations expressly permit oral requests; the new law does not expressly address the issue.  See Proposed 950 CMR 32.07(1)(a); Act, § 10, amending G.L. c. 66, § 10(a).

Duties of the Newly-Created Records Access Officer

The new law requires records custodians to designate one or more employees as a “records access officer,” to coordinate responses to and facilitate resolution of requests.  See Act, § 9, inserting G.L. c. 66, § 6A.  The records access officer must help identify the documents requestors seek; prepare guidelines to enable informed requests about the availability of records; and document all requests, including the request and response dates, the time spent fulfilling each request, fees charged, and details of all appeals.  The guidelines must be posted on the custodian’s website and must list the categories of public records that the custodian maintains.  Id.

When responding to a public records request, a records access officer must help facilitate resolution of the request, including by:

  • identifying any public records or categories of public records not within the agency or municipality’s control;
  • identifying the agency or municipality that may have the requested records;
  • identifying any records (or portions thereof) that the custodian intends to withhold, and providing the specific reasons for such withholding, including the specific exemption(s) relied upon;
  • identifying any public records (or portions thereof) that the custodian intends to produce, and, if applicable, providing a detailed explanation of why additional time is required to produce the records; and
  • suggesting a reasonable modification of the scope of the request or offer to assist the requestor to modify the scope of the request if doing so would enable the agency or municipality to produce records sought more efficiently and affordably.

Act, § 10, amending G.L. c. 66, § 10(b).  Records are to be provided by electronic means when possible, unless the requestor is unable to receive or access the records in a usable electronic form.  Act, § 9, inserting G.L. c. 66, § 6A(d).

Agencies—but not municipalities—must provide on their websites searchable electronic copies of many public records such as agency decisions, annual reports, winning bids for public contracts, public meeting notices and minutes, and “information of significant interest that the agency deems appropriate to post.”  Act, § 14, inserting G.L. c. 66, § 19(b).  These provisions, combined with the detailed record-keeping requirements imposed by the Act concerning the disposition of public records requests, see Act, § 9, inserting G.L. c. 66, § 6A(e), are intended to improve the response process significantly.

New Deadlines for Responding to Public Records Requests

The Act establishes new deadlines within which custodians must respond to public records requests.  The new deadlines attempt to balance the interest in timely disclosure of public records with the agencies and municipalities’ administrative interests.

The old version of the Public Records Law contained two related, but not altogether harmonious, provisions concerning the response time for a public records request.  Chapter 66, § 10(a) provided that a custodian “shall, at reasonable times and without unreasonable delay” permit the inspection and copying of public records, while § 10(b) specified that a custodian “shall, within ten [calendar] days following receipt of a request for inspection or copy of a public record, comply with such request.”  G.L. c. 66, § 10(b); Secretary of the Commonwealth, Division of Public Records, A Guide to the Massachusetts Public Records Law, 1, 6 (2013).  The Supreme Judicial Court has interpreted these provisions to mean that custodians must always respond to public records requests “without unreasonable delay,” and that producing a record within ten days is “presumptively reasonable.”  Globe Newspaper Company v. Comm’r of Education, 439 Mass. 124, 130-31, 133 n.13 (2003).  Thus, under the old version of the law, a delay beyond ten days could be “reasonable” if a custodian demonstrated that the “magnitude or difficulty of the request and the other responsibilities of the agency” prevented it from satisfying the ten-day deadline.  Id. at 132 n.12.

The new law takes a different approach:  it permits custodians more than ten days to respond to certain types of requests but limits the duration of permissible extensions of time to respond.  Section 10(a), as amended, provides that a records access officer shall “at reasonable times and without unreasonable delay permit inspection or furnish a copy of any public record … not later than 10 business days following the receipt of the request.”  Act, § 10, amending G.L. c. 66, § 10(a).  If the “magnitude or difficulty of the request, or the receipt of multiple requests from the same requestor” makes an agency unable to respond within the ten-day period, the custodian must identify a “reasonable timeframe” for compliance.  The outer limits of an agency’s response “shall not exceed 15 business days following the initial receipt of the request for public records,” and a municipality’s response “shall not exceed 25 business days” following the initial receipt of the public records request.  Id., amending G.L. c. 66, § 10 (b)(vi).

Further extensions may be granted by the Supervisor of Public Records if the magnitude or difficulty of a request (or the receipt of multiple requests from the same requestor) unduly burdens the agency or municipality and prevents timely compliance.  In such cases, the Supervisor may grant an agency a “single extension” not to exceed 20 business days and a municipality a “single extension” not to exceed 30 business days.  Act, § 10, amending G.L. c. 66, § 10(c).

The new law does not expressly address two questions likely to be faced by courts.  The first is whether a custodian who has not produced documents within the maximum period allowed under the Act is entitled to prove, as under the current law, that there has been no “unreasonable delay” because of the scope of the request and the resources needed to achieve compliance.  The answer to that question may turn on whether the specified durations of extensions of time permitted under the Act, including the express reference to the Supervisor of Records’ authority to grant just a “single extension,” supplant potentially more permissive interpretations of the term “without unreasonable delay.”  See generally Comm’r of Education, 439 Mass. at 130-31.

The second likely question concerns the use of public records requests by litigants who sue or are sued by the government.  Unlike discovery requests, public records requests are not cabined by principles of relevance, nor are custodians permitted to consider a requestor’s motivation in asking for a document.  See 950 CMR 32.05 (5).  Public records requests by litigants who seek extra-judicial discovery might require courts to determine whether the deadlines established by the Act are subject to modification based on a case-specific application of the “without unreasonable delay” standard.  The Supervisor’s Proposed Regulations anticipate this issue by providing that a requestor’s administrative appeal may be denied if “the public records in question are the subjects of disputes in active litigation, administrative hearings or mediation.”  Proposed 950 CMR 32.09(j)(1).

Permissible Charges for Public Records

A custodian may assess a reasonable fee for the production of a public record unless the records are freely available for public inspection or unless the custodian failed to respond to the request within the required ten business days.  Act, § 10, amending G.L. c. 66, §§ 10(d) and 10(e).  The “reasonable fee” is limited to the actual cost of reproducing the record.  Id., § 10(d)(i).  The actual cost of any storage device or material provided may be included as part of the fee, but the charge for standard black-and-white paper copies or printouts of records cannot exceed 5 cents per page for copies or printouts.  Id.  Formerly, records custodians could charge between 20 and 50 cents per page, depending on whether the copy was a photocopy, microfilm or microfiche, or computer printout.  See 950 CMR 32.06(a), (b), (d).

The new law also permits a custodian to charge for time in excess of four hours spent locating, retrieving, copying and, if necessary, redacting the records.  The fee may be charged at an hourly rate equal to or less than the hourly rate attributed to the lowest paid employee who has the necessary skill to perform the tasks, not to exceed $25 per hour.  Act, § 10, amending G.L. c. 66, § 10(d)(ii).  Municipalities have additional leeway.  Those with populations of less than 20,000 may charge for all such time, while those with populations of more than 20,000 may charge for time in excess of two hours.  Agencies and municipalities may seek the Supervisor’s approval to charge more than $25 per hour if (a) the request is for a commercial purpose[2] or (b) the fee was necessary and reasonable to prudently perform the tasks and was not intended to prevent access to public records.  Id., amending G.L. c. 66, § 10(d)(iv).

The Recovery of Attorneys’ Fees and Punitive Damages

The new law creates a presumption in favor of awarding attorneys’ fees and costs if the requestor obtains relief either through judicial order or consent decree, or if the agency provides the documents after a complaint is filed against it.  See Act, § 10, inserting G.L. c. 66, § 10A(d)(2).  There is no presumption in favor of attorneys’ fees in cases where:

  • the supervisor of records previously ruled in the custodian’s favor;
  • the custodian “reasonably relied upon a published opinion” by the attorney general or by an appellate court of the Commonwealth that was “based on substantially similar facts”;
  • the request was “designed to harass or intimidate”; or
  • the request was “not in the public interest and made for a commercial purpose unrelated to disseminating information to the public about actual or alleged government activity.”

Id. 

Under the new law, the Superior Court also may assess punitive damages between $1,000 and $5,000 against a defendant custodian if the custodian did not act in good faith in failing to timely furnish a requested record.  Act, § 10, inserting G.L. c. 66, § 10A(d)(4).  Any damages will be deposited into the Public Records Assistance Fund and may be used to provide grants to municipalities to foster best practices for increasing access to public records and facilitate compliance with the public records law.  Act, § 6, inserting G.L. c. 10, § 35D.

Conclusion

If the amendments achieve their intended purpose, the “new way of doing business” under the Public Records Law should improve communications between requestors and records custodians, increase the number of public records available online, establish enforceable timeframes for producing public records, impose cost controls to reduce excessive fees, and enhance enforcement efforts by allowing attorneys’ fees awards.

[1] Among the provisions of the Act not addressed by this article are (a) the creation of a special legislative commission to “examine the constitutionality and practicality of subjecting the general court, the executive office of the governor and the judicial branch to the public records law” and to issue a report by December 30, 2017, Act, § 20(c); (b) a new exemption for personal emails of public employees, Act, § 4, amending G.L. c. 4, § 7, cl. 26(o) and (p) and Act, § 9, inserting G.L. c. 66, § 6A(c); and (c) a provision expressly applying the Public Records Law to the Massachusetts Bay Transportation Authority Retirement Board but granting the Board an exemption for trade secrets or commercial or financial information that relates to the investment of public trust or retirement funds, Act, 14, inserting G.L. c. 66 §21.

[2] “Commercial purpose” is defined as the “sale or resale of any portion of the public record or the use of information from the public record to advance the requestor’s strategic business interests in a manner that the requestor can reasonably expect to make a profit, and shall not include gathering or reporting news or gathering information to promote citizen oversight or further the understanding of the operation or activities of government or for academic, scientific, journalistic or public research or education.”  Act, § 10, inserting G.L. c. 66, § 10(d)(ix).

Jonathan M. Albano is a partner at Morgan Lewis & Bockius LLP.

Emma D. Hall is an associate at Morgan Lewis & Bockius LLP.


Magazu and the Expansion of Agency Power

lundy_sandyby Sandra E. Lundy

Legal Analysis

May a couple’s childrearing practices, which are not illegal and are deeply rooted in their sincere religious convictions, disqualify them from becoming foster and pre-adoptive parents?  In the closely watched case Magazu v. Department of Children and Families,[i] the Justices unanimously answered “yes.”  Here, I argue that while Magazu may have been correctly decided, the Court’s analysis has troubling implications for the expansion of agency power.

Path to the SJC

Gregory and Melanie Magazu had two biological daughters but wanted a larger family.  Concerns about Melanie’s health led them to apply to become foster and pre-adoptive parents. The couple seemed ideally suited to foster and then adopt a child who was in the Department of Children and Families’ (“DCF”) care – until they revealed that they occasionally used physical punishment on their biological children. Believing as a matter of religious faith in the maxim “spare the rod, spoil the child,” Greg or Melanie, on the few occasions when one of their daughters engaged in “a continuous pattern of disobedience,” would spank the child on the buttocks by hand in the privacy of the girl’s bedroom.[ii]

DCF regulations prohibit the use of corporal punishment on a foster child.[iii]  Accordingly, the Magazus were prepared to enter into a written agreement not to use corporal punishment on any foster child placed in their home and never to physically punish one of their biological children in the presence of the foster child. The couple would not, however, and for religious reasons could not, agree to forego physical discipline of their biological children. Citing their refusal, DCF denied the Magazus’ application to become foster and pre-adoptive parents. The Magazus appealed.  At the administrative hearing, DCF’s witnesses testified that foster children typically have been subjected to abuse and neglect and could be re-traumatized by direct or indirect exposure to corporal discipline.  DCF acknowledged that it had no written policy disqualifying parents who physically discipline their biological children from becoming foster parents, but maintained that such was its unwritten policy and practice.  First the hearing officer, and then a Superior Court judge, affirmed DCF’s denial of the Magazus’ application.  The Supreme Judicial Court transferred the case sua sponte from the Appeals Court.

The Decision

The Justices faced two questions of law.  First, was DCF’s decision arbitrary and capricious, based on an irrational interpretation of its statutory and regulatory authority, and/or ungrounded in substantial evidence, in violation of DCF’s statutory and regulatory mandates?  Second, by conditioning the couple’s receipt of a government benefit on their renunciation of their religious practices, did DCF violate the Magazus’ free exercise rights under the Federal and Massachusetts Constitutions?

The Justices dismissed both claims. The Court deferred–almost without scrutiny–to DCF’s policy of not placing foster and preadoptive children in homes where parents physically discipline their children.  Notwithstanding that the policy was “not . . . articulated in express terms,” the Court held that “such a policy falls squarely within the parameters of the department’s enabling legislation and companion regulations, and is rationally related to the department’s objectives in the placement of foster children.”[iv] The Court next applied the familiar “balancing test” of Wisconsin v. Yoder[v] and Attorney Gen. v. Desilets[vi] to the constitutional claim.  The Court concluded that DCF had substantially burdened the Magazus’ practice of their sincere religious convictions by presenting them with an untenable choice:  the couple could become foster parents by abandoning their religiously-motivated practices, or they could continue their faith-based disciplinary practices and abandon any hope of becoming foster and pre-adoptive parents.  Nonetheless, the Court held that the substantial burden on the Magazus’ constitutional rights was outweighed by the State’s “first and paramount duty,” rooted in its ancient parens patriae authority, to protect children from actual or potential harm.[vii] The decision shut the door on the Magazus’ hopes to foster and adopt children through DCF.

Judging By Unwritten Rules

It is easy to assume that Magazu was correctly decided.  Both common sense and compassion argue for taking every precaution to protect emotionally fragile children from further harm.  Nonetheless, the Court’s reasoning is troubling on at least two fronts.

First, the Court extended unwarranted deference to DCF’s “unwritten” policies and procedures.  A fundamental objective of the Administrative Procedures Act, G. L. c. 30A, which governs DCF’s actions, is to ensure the agency’s objectivity, accountability, transparency, predictability, and uniformity in its application of policies and other practices.[viii] Permitting DCF, or any agency, to rely on unwritten rules severely limits judicial oversight of agency discretion.  How does a court distinguish between a legitimate unwritten policy and post hoc rationalization?  How is a court to know, for instance, when the unwritten rule was adopted, by whom, for what reason, and how it was communicated?

The Court’s deference to DCF’s unwritten policies rested on the thinnest of precedents.  In both cases on which the Court relies, Anusavice v. Board of Registration in Dentistry[ix] and Arthurs v. Board of Registration in Med.,[x] the agency’s position on the unethical or criminal characteristics of the conduct at issue could readily have been foreseen from prior published agency decisions.  Here, the Magazus’ disqualifying conduct was legally permissible: within limits, one may spank one’s child. See, e.g., Commonwealth v. Dorvil; Cobble v. Department of Soc. Services.[xi]  The Magazus had no notice that their lawful conduct would disqualify them to be foster parents.

Justice Cordy’s concurrence, joined by Justices Botsford and Duffly, gives voice to this concern about unfettered deference to unwritten agency policy.”[xii] Justice Cordy begins by acknowledging two stark realities: the increasing need for good Massachusetts foster homes in light of DCF’s growing caseload, and “the highly publicized tragedies of the last two years regarding children under the supervision of the department in foster homes,” including a recent horrific case in the western region where the Magazus reside.[xiii]  He also reiterates the uncontested evidence demonstrating “that in every respect (but for one) [the Magazus] were ideal foster and preadoptive candidates.”[xiv] In light of the department’s woeful record of investigating recent notorious cases of foster placements, where the warning signs of danger were writ large, Justice Cordy wrote that one is “left to wonder . . . whether the high standards and intensive assessment and scrutiny applied to the plaintiffs is the exception rather than the norm,” or “whether the real problem in this case was not so much the department’s concern for child safety, but rather a disagreement with the plaintiff’s beliefs regarding the upbringing of their children.”[xv]  He queries whether, whatever the unwritten licensing standard actually is, it will be uniformly applied.[xvi] If an agency may impose significant burdens on individuals based on unwritten policies, the concurrence suggests, meaningful judicial review of the conduct of State bureaucracies is all but eviscerated.

The Paternalistic State

A second reason for concern in Magazu is the Court’s reliance in the parens patriae doctrine to justify burdening the Magazus’ constitutional rights. The doctrine of parens patriae endows the State with inherent authority to protect the vulnerable, particularly children, from harm. See, e.g., Petition of Catholic Charitable Bureau of the Archdiocese of Boston, Inc., to Dispense with Consent to Adoption.[xvii]  Massachusetts appellate courts have invoked the doctrine in countless child-related cases.

Parens patriae, however, like its kindred “best interests of the child” standard, is a doctrine increasingly criticized as inchoate and infantilizing.[xviii]  Recently, in Guardianship of L.H.,[xix] a case involving substituted judgment for an incompetent adult, Judge Agnes (dissenting) implored courts to “be cautious and critical of signs of paternalism legitimized by the parens patriae doctrine, where State actors purport to have an absolute understanding of what is in the best interests of an individual, whose liberty, dignity and privacy are at issue, and whose voice is muted by the swift and overriding authority of court-appointed  professionals.”[xx]  Judge Agnes’ dissent is particularly cautionary for Magazu, where DCF presented no hard data on actual or prognostic harm, where the prospective foster parents pledged to abide by DCF regulations concerning the discipline of children placed in their care, and where their credentials were otherwise stellar.

Of course, the Magazus are not the only parents ensnared here by parens patriae.  The decision summarily disqualifies an entire class of people whose religious convictions lead them to physically discipline their children from even becoming foster and preadoptive parents.  Regardless of one’s views on the corporal punishment of children, the use of parens patriae in Magazu to preclude any foster child from finding love and care in a loving family invites speculation about just what the limits of parens patriae, if any, may possibly be.

Conclusion

Magazu closes the door to foster parentage to the Magazus and all those similarly situated.  How widely it opens the door to bureaucratic over-reach will be tested in the line of cases that follow.

Sandra E. Lundy is an appellate and domestic relations litigator at Tarlow, Breed, Hart & Rodgers, P.C., Boston.  She is Board Member of the Women’s Bar Association and a former member of the BBA Family Law Section Council. Attorney Lundy received her J.D. from Yale Law School and her Ph.D. from Columbia University.

[i] 473 Mass. 430 (2016).

[ii] Id. at 433.

[iii] See 110 Code Mass. Regs. §§ 7.104 (1) (q) and 7.111(3).

[iv] 473 Mass at 440-441.

[v] 406 U.S. 205 (1972).

[vi] 418 Mass. 316, 321-323 (1944).

[vii] 473 Mass at 445-446.  See also 418 Mass at 321-323.

[viii] See, e.g., G. L. c. 30A, §§ 2-6.

[ix] 451 Mass. 786, 795 (2008).

[x] 383 Mass. 299, 312-313 (1981).

[xi] 472 Mass. 1 (2015); 430 Mass. 385 (1999).

[xii] 473 Mass. at 446-449  (Cordy, J., concurring).

[xiii] Id. at 448.

[xiv] Id. at 447..

[xv] Id. at 448.

[xvi] Id. at 448-449.

[xvii] 392 Mass. 738, 740-741 (1984).

[xviii] See, for example, Charlow, Awarding Custody: The Best Interests of the Child and Other Fictions, 5 Yale L. and Pol’y Rev.  267, 269-273  (1986), available at http://digitalcommons.law.yale.edu/ylpr/vol5/iss2/3.

[xix] 84 Mass. App. Ct. 711 (2014),

[xx] Id. at 734.


Motions to Unseal in Class Actions: Balancing the Public Interest in Access to Judicial Records Against a Party’s Interest in Secrecy

mcloughlin_ianby Ian McLoughlin

Legal Analysis

Class actions often involve matters of significant public interest, such as price-fixing or dangerous product defects. At the same time, class actions routinely involve confidential and sensitive business information. Courts are increasingly grappling with the question of when confidential documents that become part of the judicial record should be sealed[i] and when they should be made publicly available. The issue has arisen in a number of recent high profile class actions, including the case against Donald Trump involving Trump University and the case against Target regarding its massive data security breach. This article provides an overview of the legal standard for sealing judicial documents and examples of how it is applied in class actions.

The Right of Public Access

The law has for many years recognized both common law and First Amendment rights of public access to judicial records, in both criminal and civil cases, in order to assist the public in monitoring the functioning of the courts, so as to encourage quality, honesty, and respect for the legal system.[ii]

Under the common law, the public has historically had a right to inspect and copy public records, including judicial records. There is a “strong presumption” in favor of openness as to such records. Whether a document is subject to this right depends on whether it is considered a “judicial” document, which in turn depends on whether it was filed with the court and made a material part of the court’s adjudicatory proceedings.[iii]

The “weight to be given the presumption of access” turns on where a document falls along “a continuum from matters that directly affect an adjudication to matters that” do not. Where documents play an important role in determining litigants’ substantive rights, the weight accorded to the presumption of access is strong. Where documents play only a negligible role in determining the parties’ substantive rights, the weight of the presumption is weak.[iv]

The common law right of public access is not absolute and may be rebutted. The burden of overcoming the presumption of access rests on the party seeking to seal documents. That burden is heavy; only the most compelling reasons justify non-disclosure. Examples of compelling reasons include where a court record could be used to “gratify private spite or promote public scandal, to circulate libelous statements, or as sources of business information that might harm a litigant’s competitive standing.”[v]

The trial court must balance the competing interests of the public and the party seeking to keep records secret. On one side of the balance, the greater the public interest in the litigation, the greater the showing necessary to overcome the presumption of access. In class actions, the standard for denying public access is applied with “particular strictness.” In a class action before the Third Circuit Court of Appeals, the Court stated as follows:

The right of public access is particularly compelling here, because many members of the “public” are also plaintiffs in the class action. Accordingly, all the reasons… for the right of access to public records apply with even greater force here. Protecting the access right in class actions “promotes [class members’] confidence” in the administration of the case. Additionally, the right of access diminishes the possibility that “injustice, incompetence, perjury, [or] fraud” will be perpetrated against those class members who have some stake in the case but are not at the forefront of the litigation. Finally, openness of class actions provides class members with a more complete understanding of the class action process and a better perception of its fairness.[vi]

On the other side of the balance, when articulating “compelling reasons” for non-disclosure, the proponent of sealing should provide detailed justifications for sealing, on a document by document basis:

In order to override the common law right of access, the party seeking the closure of a hearing or the sealing of part of the judicial record bears the burden of showing that the material is the kind of information that courts will protect and that disclosure will work a clearly defined and serious injury to the party seeking closure. In delineating the injury to be prevented, specificity is essential. Broad allegations of harm, bereft of specific examples or articulated reasoning, are insufficient.[vii]

The scope of the First Amendment right of access is more limited than the common law right. Documents are subject to the First Amendment right only if: (1) the class of documents sought has historically been open to the public; and (2) access to the documents plays a significant role in the functioning of the particular process in question.[viii] Perhaps because of the more limited scope of the First Amendment right, most of the attempts to gain access to information instead focus on the common law right.

Parties will sometimes try to bypass the public’s right of access by invoking stipulated protective orders entered under Federal Rule of Civil Procedure 26. But there is a material difference between such protective orders and orders to seal judicial records. The former relate to discovery between the parties, whereas the latter concern material that has been placed in the court record. A party cannot file documents under seal simply because they were originally produced pursuant to a Rule 26 protective order.[ix]

Motions to Unseal in Recent Class Actions

Several courts have recently decided motions to unseal in a series of widely publicized class actions. In Shane, for example, the Sixth Circuit Court of Appeals reversed a district court’s orders sealing materials and approving a settlement in a class action against Blue Cross Blue Shield alleging it engaged in price-fixing to the detriment of millions of Michigan citizens.[x] Prior to the settlement, the parties filed various materials under seal in connection with the plaintiffs’ motion for class certification, including a detailed expert report valuing the class’s claims. The parties thereafter reached a settlement and the district court approved it, but the class certification materials remained under seal, even after various objectors to the settlement sought access.

The Sixth Circuit reversed the sealing order and vacated the order approving the settlement, reasoning that the sealed materials were critical to the class’s ability to evaluate the settlement, and that the parties’ asserted bases for sealing were “brief, perfunctory, and patently inadequate.” The Sixth Circuit faulted the parties and the district court for conflating “the standards for entering a protective order with the vastly more demanding standards for sealing off judicial records from public view.” The Sixth Circuit also rejected Blue Cross’ concern about disclosing “competitively-sensitive financial and negotiating information” because “information about a practice since outlawed by the Michigan Legislature is not entitled to protection as a legitimate trade secret.”

Similarly, in Center for Auto Safety, a class action against Chrysler alleging defects in certain of its vehicles, the Ninth Circuit Court of Appeals vacated a district court order refusing to unseal documents.[xi] The plaintiffs had moved for a preliminary injunction to require Chrysler to notify the proposed class of the alleged risks its vehicles posed, and the parties had filed confidential discovery documents concerning that motion under seal. The Center for Auto Safety moved to intervene and to unseal the documents, which the district court denied, relying upon language from prior Ninth Circuit rulings that had suggested that while “compelling reasons” were required to seal materials in connection with “dispositive motions,” a less stringent “good cause” standard applied for “non-dispositive” motions such as one seeking a preliminary injunction.

The Ninth Circuit rejected “the apparent simplicity of the district court’s binary approach,” explaining that the proper inquiry was whether the underlying motion was more than tangentially related to the merits of the case, “in which case the “compelling reasons” standard applied. A motion for preliminary injunction, “which frequently requires the court to address the merits of the case” and “which often includes the presentation of substantial evidence” will often “reflect the need for public access.” Because the district court had applied the wrong standard, the Ninth Circuit vacated its order and remanded the case so that the district court could apply the appropriate, “compelling reasons” standard.

Along the same lines, in the class action against Donald Trump involving Trump University, the Southern District of California granted a motion by the Washington Post to intervene and unseal various exhibits the parties had filed in connection with the plaintiff’s motion for class certification, including materials that allegedly evidenced a deceptive advertising campaign by Trump that had defrauded thousands of consumers.[xii] The court applied the “compelling reasons” standard, determining that a motion for class certification is “more than tangentially related to the merits,” and then balanced the competing interests of the public and Trump.

The court rejected Trump’s argument that certain documents contained trade secrets, because some of those documents had already been posted online by Politico. With respect to the other documents, the court rejected Trump’s “blanket assertion as to why the disputed materials constitute[d] trade secrets.” Trump had argued that this information retained commercial value even though Trump University had stopped enrolling new students in 2010 because Trump University might someday enroll students again. The court rejected that argument as “wholly speculative.” It held that the Post had “made a strong argument that the public interest in understanding the judicial process is heightened” given that Trump had become “the front-runner for the Republican nomination in the 2016 presidential race” and had himself “placed the integrity of these court proceedings at issue.”

Similarly, in a class action against Target arising out of a breach of the company’s data, a federal district court in Minnesota granted the plaintiffs’ motion to unseal their memorandum of law in support of their motion for class certification.[xiii] The court rejected Target’s argument that disclosure would risk another data breach, ruling that Target had failed to demonstrate how statements about Target’s alleged negligent conduct prior to and during the data breach in 2013 constituted a disclosure of confidential material about its information security procedures in 2015. The court also held that Target’s concern that disclosure would result in adverse publicity did not warrant sealing the memorandum in question.

Although courts frequently unseal judicial documents, they do not always do so. For example, in a class action against General Motors arising out of alleged defects in the ignition switches on its vehicles, the Southern District of New York sealed a number of documents concerning a discovery motion because it had not considered them in its ruling.[xiv] Furthermore, in a securities class action against State Street Corporation and affiliated entities, the United States district court in Massachusetts denied a motion to unseal documents filed in connection with summary judgment motions where the defendants submitted two declarations establishing “the sensitive and confidential nature of the information and… a particularized showing of the presence of commercial harm.”[xv] Similarly, in a class action against Google alleging that it had it violated consumers’ privacy rights in connection with its operation of Gmail, the Northern District of California largely denied a motion to unseal materials filed in connection with the plaintiffs’ motion for class certification.[xvi] After conducting a detailed document by document analysis, the court permitted Google to seal most of the materials because they related to specific descriptions of either (1) how Gmail operates, the disclosure of which could cause competitive harm to Google; or (2) how users’ interactions with the Gmail system affect how messages are transmitted, the disclosure of which could lead to a breach in security of that system.

Motions to unseal judicial records are frequently brought in class actions. Those moving to unseal are most likely to succeed where the case presents a matter of significant public interest and the documents are closely related to the merits. Those opposing such motions are most likely to succeed where the documents are not important to the court’s adjudication of the merits or where the documents are confidential and their disclosure would cause a substantial injury to a party. Parties looking to keep records sealed must make a compelling, specific argument for sealing – for each document they wish to keep out of the public eye.

[i] While this article and the federal courts use the term “sealed” to refer to a situation in which the parties and the Court may view documents, but the public may not, it should also be noted that Massachusetts state courts use the term “impoundment” to refer to that situation, and use the word “sealed” to refer to a situation in which only the Court, and not the parties or public, may view documents. See, e.g., Pixley v. Commonwealth, 453 Mass. 827, 836 n.12 (2009).

[ii] See, e.g., Press-Enterprise Co. v. Superior Court of California, 464 U.S. 501, 506-10 (1984); Ctr. For Auto Safety v. Chrysler Group, LLC, 809 F.3d 1092, 1096 (9th Cir. 2016); In re Cendant Corp., 260 F.3d 183, 198 n. 13 (3d Cir. 2001); In re Policy Mgmt. Sys. Corp., No. 94-2254, 1995 U.S. App. LEXIS 25900 at *7 (4th Cir. Sept. 13, 1995); In re Continental Illinois Sec. Litigation, 732 F.2d 1302, 1308-09 (7th Cir. 1984).

[iii] See, e.g., Nixon v. Warner Communications Inc., 435 U.S. 589, 597 (1978); Shane Grp., Inc. v. Blue Cross Blue Shield, No. 15-1544, 2016 U.S. App. LEXIS 10264 at *6-7 (6th Cir. June 7, 2016); Ctr. For Auto Safety, 809 F.3d at 1096; Cendant, 260 F. 3d at 192; In re Policy Mgmt., 1995 U.S. App. LEXIS 25900 at *7.

[iv] United States v. Amodeo, 71 F.3d 1044, 1049-50 (2d Cir. 1995).

[v] Ctr. For Auto Safety, 809 F.3d at 1097 (internal citations and quotations omitted); Shane, 2016 U.S. App. LEXIS 10264 at *6-7; Cendant, 260 F. 3d at 194.

[vi] Cendant, 260 F.3d at 193 (internal citations removed). See also Shane, 2016 U.S. App. LEXIS 10264 at *7; Ctr. For Auto Safety, 809 F.3d at 1096-97.

[vii] Cendant, 260 F. 3d at 194. See also Shane, 2016 U.S. App. LEXIS 10264 at *7; In re Midland Nat’l Life Ins. Co Annuity Sales Practices Litig. v. Allianz Life Ins. Co. of N. Am., 686 F.3d 1115, 1119 (9th Cir. 2012).

[viii] See, e.g., Press-Enter. Co. 104 S. Ct. at 823-24; Cendant, 260 F.3d at 198 n. 13; Policy Mgmt., 1995 U.S. App. LEXIS 25900 at *7; Glass Dimensions, Inc. v. State St. Corp., No. 10-10588-FDS, 2013 U.S. Dist. LEXIS 170190 at *6 (D. Mass. Dec. 3, 2013).

[ix] Shane, 2016 U.S. App. LEXIS 10264 at *6; Baxter Int’l v. Abbot Labs, 297 F.3d 544, 545-47 (7th Cir. 2002).

[x] Shane, 2016 U.S. App. LEXIS 10264.

[xi] Ctr. For Auto Safety, 809 F.3d at 1094-96, 1099-1103.

[xii] Cohen v. Trump, No. 13-cv-2519-GPC-WVG, Order (S.D. Cal. May 27, 2016).

[xiii] In re: Target Corporation Customer Data Breach Litig., Case No. 14-md-2522, Order (D. Minn. Aug. 13, 2015).

[xiv] In re General Motors Ignition Switch Litig., 14-md-2543, Orders (S.D.N.Y. July 2 and Dec. 2, 2015).

[xv] Glass Dimensions, 2013 U.S. Dist. LEXIS 170190.

[xvi] In re Google Inc. Gmail Litig., No. 13-md-2430, Order (N.D. Cal. August 6, 2014).

Ian McLoughlin is a partner at Shapiro, Haber and Urmy. He represents plaintiffs in class actions against businesses accused of violating antitrust, consumer protection, securities, and wage and hour laws. He also represents whistle-blowers bringing claims pursuant to the SEC’s whistleblower program and the False Claims Act.


Not So Fast on MARATHON MONDAY: Trademark Board Rejects Boston Athletic Association’s Bid to Prevent Clothier from Registering the Term

welch_johnzwisler_jcby John L. Welch and John Carl Zwisler

Legal Analysis

New Englanders know what “Marathon Monday” signifies: the third Monday in April, the Red Sox in the morning, the Boston Marathon in the afternoon, Hopkinton, 26.2 miles, Heartbreak Hill, the crowd-lined streets.  Many know that the race is overseen (or “run”) by the Boston Athletic Association (BAA).  The BAA owns federal registrations for the mark BOSTON MARATHON (for entertainment services and for various goods including clothing).  But what rights, if any, does the BAA have in the term “Marathon Monday?” An answer arrived recently in a ruling by the Trademark Trial and Appeal Board (TTAB or Board).[1]

Velocity, LLC, based in Everett, Massachusetts applied to register the trademark MARATHON MONDAY for certain clothing items, namely, tops, bottoms, headwear, sweatshirts, sweat pants, jackets, pullovers, caps, hats, and socks.  In November 2011, the BAA opposed Velocity’s application, basing its opposition on Section 2(a) of the Lanham Act, which  bars registration of a mark that “falsely suggests a connection with persons, living or dead, institutions, beliefs or national symbols.”[2]  The BAA alleged that the mark MARATHON MONDAY would be recognized as its previously used name or identity because it “points uniquely and unmistakably” to the BAA.[3]

Slow down there! What’s this Section 2(a) all about, you might ask?

The United States Court of Appeals for the Federal Circuit (CAFC) discussed the purpose of the “false connection” provision of Section 2(a) in a seminal decision involving a certain university’s unsuccessful attempt to block registration of the mark NOTRE DAME for cheese.[4] Reviewing the legislative history of Section 2(a), the CAFC concluded that the drafters of the proposed legislation were concerned with protecting the name of an individual or institution that was not a technical trademark – i.e., it was not used as a brand name for specific goods or services – upon which a Section 2(d)[5] likelihood of confusion objection could be based.  The court observed that the drafters intended to adopt concepts of the right of privacy and the related right of publicity, which protect one’s control over the use of an identity or persona.  In order to establish a protectable right, a person or institution must show that the term at issue points uniquely and unmistakably to that person or institution.  In contrast to Section 2(d), which is meant to prevent consumer confusion as to the source of goods or services, Section 2(a) is primarily intended to protect the person or institution from unauthorized use of its identity, independent of source confusion.

The TTAB applies a rather stringent test in determining whether a mark should be barred from registration under 2(a).  It considers whether: (1) the mark is the same as, or a close approximation of, the name or identity previously used by another person or institution; (2) the mark would be recognized as pointing uniquely and unmistakably to that person or institution; (3) the person or institution named by the mark or using the mark is not involved with the activities performed by the applicant under the mark; and (4) the fame or reputation of the person or institution is such that when the mark is used to identify the applicant’s goods or services, a connection with that person or institution would be presumed.[6]

Under Section 2(a), a plaintiff need not prove that the mark or name at issue is used as a trademark or service mark for goods or services (as required for Section 2(d) likelihood of confusion).  For example, the Board held that the petitioner for cancellation of a registration for the mark TWIGGY for children’s clothing could succeed under Section 2(a) even though her claim of likelihood of confusion under 2(d) failed because of abandonment of her trademark.[7]  Lesley Hornby, known personally and professionally as “Twiggy,” had used the mark TWIGGY from 1967-1970 for various goods, including clothing, but by the time the respondent had filed its application to register TWIGGY in 1977, Hornby’s mark had been abandoned for nonuse.  Nonetheless, Hornby, who came to prominence as a British teen model in the 1960s, established the fame and reputation of her persona as “Twiggy” prior to and at the time of respondent’s registration, and the evidence demonstrated that the mark TWIGGY pointed uniquely and unmistakably to Hornby.

Even if a plaintiff never used the mark or name in question at all, Section 2(a) relief may be available.  For example, in a case involving the laid-back songster Jimmy Buffett, the Board considered the viability of Buffett’s challenge to an application for the mark MARGARITAVILLE for restaurant services.  Buffett claimed that the mark falsely suggested a connection with his public persona, even though he had not publicly exploited the term “Margaritaville” other than as the title of his hit song.[8]  The TTAB observed that Section 2(a) requires that the applicant’s mark must point uniquely and unmistakably to the opposer, not that the opposer actually used the mark.  Buffett relied on press clippings, licensing agreements concerning the name of a future restaurant venture, J.B.’S Margaritaville, and affidavits from members of the music industry to support his claim that the public associated the term “Margaritaville” with his persona.  The Board found that Buffett had stated a viable claim under Section 2(a).

Although Twiggy and Jimmy Buffett cleared the Section 2(a) hurdle, the bar proved to be too high for the BAA.

In its opposition to Velocity’s application to register MARATHON MONDAY, the BAA adopted a two-step approach, contending that (1) the term “Boston Marathon” serves as the BAA’s identity or persona for purposes of Section 2(a), and (2) “Marathon Monday” is a close approximation of “Boston Marathon” because the phrases are “interchangeable.”[9]

The fact that neither “Boston Marathon” nor “Marathon Monday” is an official name of the BAA was not dispositive.  Even a name created by the public, such as a nickname or an informal reference like “Margaritaville,” may qualify as an identity for purposes of Section 2(a) and thus give rise to a protectable interest.[10],[11]  There was no dispute that the term “Boston Marathon” is well known to the public as a competitive marathon and a famous “runners’ race,” but it may not be well known that the race is organized by a corporate entity named the Boston Athletic Association.[12]

The Board faced a similar issue in a case involving the mark SYDNEY 2000, ruling that the mark falsely suggested a connection with the Olympic Games taking place that year in Sydney, Australia.[13]  Although it did not deem the Olympic Games to be an “institution” per se, the Board ruled that an event of “such magnitude, which occurs on a regular ongoing basis” and requires significant organizational structure, qualified as an “institution” for Section 2(a) purposes.[14]  Because of the widespread publicity for the Olympic Games, the Board concluded that the general public knew the 2000 Games would be held in Sydney.  Consumers would thus presume a connection between the applicant’s publicity services under the mark SYDNEY 2000 and the Olympic Games.

Similarly, given the “magnitude and longevity of the event,”[15] the Board found that “Boston Marathon” has become associated with its organizer, and although the general public may not know the organizer’s actual name, consumers will understand that the alternative name “Boston Marathon” represents or identifies the association.  The Board therefore concluded that “Boston Marathon” is perceived as a name or identity of the BAA.

Although the BAA was successful in the first leg of its argument, it failed in the second: it did not prove that “Marathon Monday” is interchangeable with “Boston Marathon” and thus a close approximation of the BAA’s persona.  The Board stated it was not enough that the two marks share the common word “marathon.”  The term “Boston Marathon” is inextricably connected to the city of Boston because of the geographic reference, whereas “Marathon Monday” lacks that geographical connection.  In short, the latter was not sufficiently similar to the former, and the second step of the BAA’s argument failed to reach the finish line.

The Board also considered whether “Marathon Monday” has itself become associated with the BAA.  While there was evidence that the BAA has to some extent used the term “Marathon Monday” to identify the race itself, there was insufficient evidence to show that the public recognizes “Marathon Monday” as identifying not only the race, but also the entity that organizes the race.  The BAA simply failed to show that “Marathon Monday” is so closely associated with the BAA that it qualifies as the BAA’s identity or persona.

In any event, Applicant Velocity’s evidence established that the term “Marathon Monday” is used by other entities across the country in connection with races in their respective geographical areas, and therefore the term could not point uniquely and unmistakably to the BAA.  Most significantly, the record included numerous website excerpts and media articles using the term “Marathon Monday” to refer to the day after the New York City Marathon and the various events in which runners may participate.

And so the TTAB dismissed the BAA’s opposition to registration of MARATHON MONDAY, and the registration issued on March 15, 2016 to Velocity’s assignee.[16]  Nonetheless, there is nothing to stop the BAA or anyone else from referring to the day of the race, or even the race itself, as “Marathon Monday.” The owner of the registration owns a prima facie exclusive right to use “Marathon Monday” as a brand name for the clothing items identified in its registration.[17]  But given the highly descriptive nature of the term “Marathon Monday,” the registrant may have a difficult time proving likelihood of confusion as to source when “Marathon Monday” is used only in an informational sense in connection with goods or services related to the Boston Marathon.  In short, Velocity may have won the race to federal registration, but it remains to be seen whether its registration will have any real commercial significance come Marathon Monday.

John L. Welch is Counsel to Wolf, Greenfield & Sacks, P.C., in Boston, specializing in trademark, copyright, and patent counseling and litigation matters. He is a frequent speaker and author on trademark law issues, and is a member of the Editorial Board of, and a contributor to, The Trademark Reporter. He is the founder and publisher of the widely-read TTABlog, which focuses on the procedure and jurisprudence of the TTAB.

John Carl Zwisler is a Law Clerk at Wolf, Greenfield & Sacks, P.C. He is a J.D. candidate, 2016, at Northeastern University School of Law and a student member of the BBA.

[1] Boston Athletic Association v. Velocity, LLC, 117 U.S.P.Q.2d 1492 (T.T.A.B. 2015).

[2] 15 U.S.C. §1052(a).

[3] Boston Athletic Association, 117 U.S.P.Q.2d at 1493.

[4] University of Notre Dame Du Lac v. J.C. Gourmet Food Imports Co., Inc., 217 U.S.P.Q. 505 (Fed. Cir. 1983). (The CAFC found that “Notre Dame” is not a name solely associated with the University, and therefore the Section 2(a) claim was dismissed).

[5] Section 2(d) of the Lanham Act, 15 U.S.C. §1052(d), in pertinent part, bars registration of a mark that “consists of or comprises a mark which so resembles a mark registered in the Patent and Trademark Office, or a mark or trade name previously used in the United States by another and not abandoned, as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive ….”

[6] See Boston Athletic Association, 117 U.S.P.Q.2d at 1495; University of Notre Dame, 217 U.S.P.Q. at 509; Buffett v. Chi-Chi’s, Inc., 226 U.S.P.Q. 428, 429 (T.T.A.B. 1985).

[7] Hornby v. TJX Cos., 87 U.S.P.Q.2d 1411 (T.T.A.B. 2008).

[8] Buffett, 226 U.S.P.Q. at 429.

[9] Boston Athletic Association, 117 U.S.P.Q.2d at 1495.

[10] Id. at 1496.

See also In Re Nieves & Nieves LLC, 113 U.S.P.Q.2d 1639, 1644 (T.T.A.B. 2015) (Affirming a Section 2(a) refusal of ROYAL KATE for cosmetics and jewelry because the mark creates a commercial impression that references Catherine, Duchess of Cambridge, also known as Kate Middleton, although she has never used that identifier).

[12] Id.

[13] In re Urbano, 51 U.S.P.Q.2d 1776 (T.T.A.B. 1999).

[14] Id. at 1779 (The Board noted that various international and national organizations participate in presenting the Olympic Games, and without evidence to the contrary it assumed there was a cooperative relationship between them).

[15] Boston Athletic Association, 117 U.S.P.Q.2d at 1496.

[16] On December 1, 2015, the mark was assigned to Charles Tuite of Northboro, Massachusetts, manager of Velocity LLC.

[17] 15 U.S.C. §1057(b).