Wisconsin Court Strikes Clause Restricting Solicitation of Employees

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An engineer’s employment contract provision broadly limiting his post-termination solicitation of former co-workers for competitive employment is an unenforceable restraint of trade under a new decision of the Wisconsin Court of Appeals. Manitowoc Co. v. Lanning, 2015AP1530 (Aug. 17, 2016). The decision, written by Judge Brian Hagedorn of District II, reversed a judgment for more than $1 million in attorneys’ fees and costs won by the engineer’s former employer after the trial court found that the engineer had repeatedly breached the covenant by soliciting his former colleagues for a direct competitor. On appeal, the court held that the covenant against soliciting employees was a restraint of trade within the purview of section 103.465 of the Wisconsin Statutes, and failed to meet the law’s requirements.

The court rejected the employer’s argument that the clause was not a restraint on competition, holding that because the “provision does not allow for the ordinary sort of competition attendant to a free market, which includes recruiting employees from competitors,” it is a restraint of trade under Wisconsin law. The court then concluded that because the clause barred the engineer’s solicitation of “any employee” of the company – including employees in a division separate from the one in which the engineer worked, and other employees the engineer never even knew worked for the company – it was too broad to be enforceable.

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Seventh Circuit Reverses Promotional Service Decision Under the Robinson-Patman Act

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On August 12, 2016, the Seventh Circuit decided Woodman’s Food Market, Inc. v. Clorox Co., No. 15-3001, and held that Clorox’s refusal to sell bulk-sized packages of certain products to some retailers, like Woodman’s, when it sold bulk-sized items to “big box” retailers, like Costco and Sam’s Club, was not a violation of the Robinson-Patman Act’s prohibition on the disproportionate provision of promotional services under 15 U.S.C. § 13(e).

The Court held that size alone is not enough to constitute a promotional “service or facility,” though it did leave open the possibility that, under different facts, package size or design could constitute a “service or facility” when combined with other promotional content.

This decision provides some clarity for manufacturers (particularly in light of the district court’s interpretation of the Robinson-Patman Act), but businesses who offer different packaging sizes or other types of specialized packaging to different channels or to different resellers should still consider the potential risk for Robinson-Patman claims in light of Woodman’s.

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Seventh Circuit Ditches “Convincing Mosaic” Standard in Employment Cases

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In the past, we have counseled our clients on steps they can take to avoid creating a “convincing mosaic” of employment discrimination. The Seventh Circuit Court of Appeals first discussed the convincing mosaic of discrimination more than 20 years ago as a metaphor to explain one way that an employee could combine lots of different evidence – none of which might entitle the employee to a trial on its own – and create enough of a picture of potential discrimination to survive summary judgment.

Since the Seventh Circuit’s first discussion of the convincing mosaic, courts increasingly treated it like a legal test that had to be satisfied in order to reach a trial. A few days ago, however, in Ortiz v. Werner Enterprises, No. 15-2574 (7th Cir. Aug. 19, 2016), the Seventh Circuit attempted to put a stop to this practice. It held that it never intended that the “metaphor” it created in 1994 would develop into a strict legal test. And it put district courts on notice that the use of a “convincing mosaic” as a legal requirement would get them reversed: “From now on, any decision of a district court that treats this phrase as a legal requirement in an employment discrimination case is subject to summary reversal, so that the district court can evaluate the evidence under the correct standard.”

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Wisconsin Court of Appeals Issues Reminder of Power of Federal Arbitration Act

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In the last generation, the U.S. Supreme Court has repeatedly promoted the policy under federal law in favor of arbitrating claims, including in the area of employment law. Among other issues, the Court has held on multiple occasions that employers can require employees to submit statutory employment claims to arbitration, whether via mandatory arbitration agreements (Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991)) or in collective bargaining agreements (14 Penn Plaza LLC v. Pyett, 556 U.S. 247 (2009)). Likewise, the Court has held that the Federal Arbitration Act (“FAA”) allows contracting parties to agree to submit their disputes to arbitration even when state law requires those disputes to be resolved by an administrative agency (as is the case with employment discrimination claims under Wisconsin law). Preston v. Ferrer, 552 U.S. 346 (2008).

Earlier this week, the Wisconsin Court of Appeals issued another decision bolstering employers’ ability to mandate arbitration of employment claims.

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Seventh Circuit Cuts Through First Amendment Forum Jargon and Issues Robust Defense of Free Expression

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Like many cities across the country, Fort Wayne, Indiana raises money through advertisements that it sells on the inside and outside of the buses it operates. And like many cities, Fort Wayne has a number of regulations on the content of those ads. Most of these regulations are uncontroversial – think of prohibitions on images or descriptions of violence, for example. A ban on ads that “express or advocate opinions or positions upon political, religious, or moral issues,” however, opens the door to problems.

Such an issue came before the Seventh Circuit in Women’s Health Link, Inc. v. Fort Wayne Public Transportation Corp., No 16-1195 (7th Cir. June 22, 2016). Health Link sought to display an ad with the picture of a young woman and the phrases “You are not alone.” and “Free resource for women seeking health care,” along with a phone number and a website address. The ad did not express any opinion on any “political, religious, or moral issues,” but Fort Wayne learned that Health Link was a pro-life organization that suggests alternatives to abortion for women with unplanned pregnancies and refused to allow the ad.

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