FTC adopts rule banning non-competes

The Federal Trade Commission (“FTC”) has adopted a rule banning non-compete agreements across all industries. Going forward, new non-competes are banned. Looking backward, “employers will simply have to provide notice to workers bound to an existing noncompete that the noncompete agreement will not be enforced against them in the future.” Senior executives who earn more than $151,164.00 annually and who are in policy-making positions may still be bound by existing agreements, but new non-competes are banned. The rule goes into effect in 120 days and litigation is anticipated. The FTC suggests that businesses worried about unfair competition can still rely on state-by-state trade secret statutes and confidentiality agreements.

From the FTC press release:

“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” said FTC Chair Lina M. Khan. “The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”

From the Washington Post:

“The uncertainty created by these rules and the future litigation creates a risky landscape for businesses as they try to protect their most valuable trade secrets and confidential information,” said Berman, co-chair of her firm’s practice for business litigation, trade secrets and restrictive covenants, in an email. “I think we’ll see rapid movement by businesses to implement alternatives to noncompetes — such as non-solicitations agreements and deferred compensation plans — because they won’t take a gamble on protecting their proprietary information.”

Share this post:

SCOTUS to Decide Scope of Liability for Third-Party Online Content

Section 230 of the Communications Decency Act has been a hot topic among media/tech lawyers for more than a decade, but garnered increased attention during the Trump administration. Now, the U.S. Supreme Court is set to address its constitutionality. And the ramifications are tremendous.

From Time magazine:

The future of the federal law that protects online platforms from liability for content uploaded on their site is up in the air as the Supreme Court is set to hear two cases that could change the internet this week.

. . . .

Section 230, which passed in 1996, is a part of the Communications Decency Act. 

The law explicitly states, “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider,” meaning online platforms are not responsible for the content a user may post. 

The law allows tech companies to moderate or remove content that is considered egregious. Section 230, however, does not protect sites that violate federal criminal law, or intellectual property law. It also does not protect platforms that create illegal or harmful content. 

Because popular sites like Facebook, Twitter and YouTube rely on user-generated content, many people have credited Section 230 for the creation of the internet we now know and love.

Read more from Time.com.
Share this post:

Proposed FTC Rule Would Require Employers to Notify Former Employees That Non-Compete is Not Valid

The Federal Trade Commission released a 216-page report outlining the dangers of non-compete clauses and branding these provisions as indicia of unfair competition. Among the requirements of the proposed new rule is a mandate that employers affirmatively notify former employees that such provisions in their contracts are no longer in effect.

Click here to peruse the FTC memorandum and proposed language.

Share this post:

FTC Recommends Ban on Non-Competes

In a far-reaching move that could raise wages and increase competition among businesses, the Federal Trade Commission on Thursday unveiled a rule that would block companies from limiting their employees’ ability to work for a rival.

The proposed rule would ban provisions of labor contracts known as noncompete agreements, which prevent workers from leaving for a competitor or starting a competing business for months or years after their employment, often within a certain geographic area. The agreements have applied to workers as varied as sandwich makershair stylistsdoctors and software engineers.

Read more from the New York Times…

Share this post:

TN Supreme Court narrows scope of “Fair Report Privilege”

In 2014, the White County, TN newspaper, The Expositor, published a story about the arrest of an individual named Jeffery Todd Burke, evidently based in part on statements made directly to the reporter by the lead detective on the case. Specifically, the paper published statements about prior alleged bad acts, asserting that Mr. Burke had been previously indicted for stealing thousands of dollars from a youth football league. It turns out that last part was not true, that Mr. Burke’s attorney gave notice to the newspaper the day of publication, but that the paper stood by its reporting because the untrue statements had allegedly come directly from the lead detective.

Mr. Burke sued the newspaper in the Circuit Court for defamation and false light invasion of privacy. The newspaper defended by relying on, among other things, Tennessee’s “Fair Report Privilege,” which immunizes journalists from liability for publishing “fair and accurate” reports of official actions or proceedings. The Supreme Court disagreed, in Jeffery Todd Burke v. Sparta Newspapers, Inc., M2016-01065-SC-R11-CV (2019), because the Detective made the statement in a one-on-one conversation with the reporter and it was not made in a public setting.

In sum, we conclude that expanding the fair report privilege to nonpublic, one-on- one conversations would constitute a departure both from the rationale on which the privilege is based and from existing Tennessee law defining its scope and that such an expansion would unnecessarily complicate the task of determining whether a report should be protected by the privilege. For all these reasons, we hold that the fair report privilege applies only to public proceedings or official actions of government that have been made public. Applying this holding to the undisputed facts, we conclude that the fair report privilege does not apply to the report at issue in this appeal. The nonpublic, one-on-one conversation between Ms. Claytor and Detective Isom was neither a public proceeding.

Interestingly, the Court also noted that “our holding here does not resolve the question of whether a press conference or a press release constitutes a public proceeding or an official action of government that has been made public.”

Click here to read the opinion.

Share this post:

Warning: Fair Report Privilege may not protect news organizations from inaccurate PIO statements in Tennessee

The Tennessee Court of Appeals released its opinion yesterday in JEFFERY TODD BURKE v. SPARTA NEWSPAPERS, INC., 2018 WL 3530839, at *3 (Tenn. Ct. App. July 23, 2018), a defamation case in which the Plaintiff (“Burke”) “acted as the middleman between a local youth football league and a fundraising company, which provided cookie dough for use in fundraising.”  A local newspaper reported the story based on information provided by the Sheriff’s public information officer, but some of the facts were wrong.  The Court held that the “fair report privilege” does not necessarily include a private, one-on-one interview with a public information officer as an official action.

The Expositor, a Sparta-based publication, reported in 2014 that:

[a]fter the football league gave him approximately $16,000 from pre-sales of cookie dough, Mr. Burke failed to turn the funds over to the fundraising company. And the football league never received the cookie dough. The article also reported that Mr. Burke was arrested in White County on January 24, 2014, and then released on bond.  The article further noted that Mr. Burke had previously been indicted on similar charges in Smith County, Tennessee.

JEFFERY TODD BURKE v. SPARTA NEWSPAPERS, INC., 2018 WL 3530839, at *1 (Tenn. Ct. App. July 23, 2018).

It appears to be undisputed that the reporter got her information from a detective, who also serves as the public information officer (“PIO”) for the White County Sheriff’s Office, before publication.  The Plaintiff, Burke, sued, claiming that the article about him was wrong in three ways.  To wit, the suit apparently alleged that the paper was wrong about: (1) the amount of money involved; (2) the fact that the cookie dough was never delivered; and (3) the fact that Mr. Burke never delivered the collected funds to the fundraising company. “According to Mr. Burke, his performance under the contract “was delayed,” but the cookie dough was ultimately delivered more than two months before the case against him was presented to the grand jury.”

At trial, the newspaper prevailed on summary judgment by invoking the “Fair Report Privilege.”  This is a defense to a defamation claim that basically says that you cannot be liable for defamation if your reporting is a fair and accurate summation of a proceeding.  Traditionally, it applied to judicial proceedings, but has been expanded to include other public proceedings.

The Court noted that:

The privilege is qualified rather than absolute. Langford v. Vanderbilt Univ., 318 S.W.2d 568, 574 (Tenn. Ct. App. 1958). For the privilege to apply, the report must be “a fair and accurate summation of the proceeding.” Smith, 944 S.W.2d at 625. The report must be “fair” in the sense that it exhibits “balance and neutrality.” Id. The report should not be “slanted or spun to convey an impression materially different from what took place,” SMOLLA, supra, § 8:75, or include “defamatory observations or comments” by the reporter. Lewis, 238 S.W.3d at 284.

Burke, 2018 WL 3530839, at *3.

I’m going to paste the Court’s analysis here in a large chunk because the distinction between proceeding and source is most interesting to me as it applies to the privilege:

In our view, the interview given by Detective Isom was not itself an official action, official proceeding, or public meeting within the scope of the fair report privilege. Our courts have not extended the fair report privilege so far as to include a private, one- on-one interview as an official action. The requirement that official actions or proceedings be open to the public serves the underlying rationale behind the privilege, allowing the press to be “the eyes and ears of the members of the public who would have been able to witness the proceeding or obtain the information.” (internal citation omitted).

The cases cited by the trial court overlook the distinction between reports of official actions or proceedings on the one hand and sources within the government on the other. 2 RODNEY A. SMOLLA, LAW OF DEFAMATION § 8:67 (“In both policy and doctrine a key distinction exists between reports of official government action and reports of information provided by official government actors.”). The public supervision rationale behind the privilege, “that the reporter acts as the ‘eyes and ears’ of the public in reporting on a proceeding or summarizing a public document,” has no application “when a reporter merely publishes a story based in whole or in part on government sources.” Id. As one commentator explained, “[r]eporting what the prosecutor or law enforcement officer said to a reporter outside the courtroom during an interview is simply the routine use of a source.” Id.

Certainly, reporters use sources for information on an official action, official proceeding, or official meeting. See DAVID A. ELDER, DEFAMATION: A LAWYER’S GUIDE § 3.2 Westlaw, (database updated July 2018) (referring to secondary or indirect sources as an “accepted and justified custom and usage of the mass media”). And the fair report privilege may still apply “where a reporter who purports to report on an official proceeding does not have personal knowledge of the proceeding but instead relies on an intermediary who does.” Bufalino v. Associated Press, 692 F.2d 266, 271 (2d Cir. 1982). But where reliance was placed on a responsible, trustworthy, and knowledgeable source, the privilege extends only to the source’s account of the official action, official proceeding, or official meeting.

Burke, 2018 WL 3530839, at *6.

Here is where the Court clarifies the distinction:

Applying this principle to the article concerning Mr. Burke, the fair report privilege would extend to information provided by Detective Isom that was public and involved official actions or proceedings, e.g., the fact of Mr. Burke’s arrest and the details of the grand jury indictment. See Duncan, 1992 WL 136172, at *1; Tenn. Code Ann. § 40-13-111 (2012); RESTATEMENT (SECOND) OF TORTS § 611 cmt. h (“An arrest by an officer is an official action, and a report of the fact of the arrest or of the charge of crime made by the officer in making or returning the arrest is . . . within the conditional privilege . . . .”). But the article went beyond official actions and proceedings. It included information about whether the cookie dough ordered through Mr. Burke was ever delivered and about whether the fundraising company received any funds. The article also included informal remarks on the strength of the case and what “lessons” might have been learned from the incident by the participants in the youth football program. Such details fall outside the scope of the privilege. See Lewis, 238 S.W.3d at 286 (concluding that the fair report privilege did not apply because defendant’s story “contained [both information gathered from a press release and] other information regarding . . . details . . . that did not come from the press release”); RESTATEMENT (SECOND) OF TORTS § 611 cmt. h (“[S]tatements made by the police or by the complainant or other witnesses or by the prosecuting attorney as to the facts of the case or the evidence expected to be given are not yet part of the judicial proceeding or of the arrest itself and are not privileged under [the fair report privilege].”).

Even if we were inclined to extend the scope of the fair report privilege to all communications, formal or informal, public or private, of police public information officers or spokespersons, we conclude that the fair report privilege should not apply here. To rely on the fair report privilege, the article should be written in such a manner that an average reader can “understand the article (or the pertinent section thereof) to be a report on or summary of an official document or proceeding.” Dameron v. Washington Magazine, Inc., 779 F.2d 736, 739 (D.C. Cir. 1985). To accomplish this, “[i]t must be apparent either from specific attribution or from the overall context that the article is quoting, paraphrasing, or otherwise drawing upon official documents or proceedings.” Id at 739; see also Rushford v. New Yorker Magazine, Inc., 846 F.2d 249, 254 (4th Cir. 1988) (liability avoidance requires proper attribution of the report to the original source); ELDER, supra, § 3.3 (reasonable identification of source is a precondition to reliance on the fair report privilege).

Burke, 2018 WL 3530839, at *7. (emphasis added).

To summarize, the Court of Appeals appears to be saying that news organizations should not assume that just because a PIO tells them something, they have a good defense to a defamation action.  If the PIO says something about the strength of the case or adds opinions about deterrence, etc., it probably does not fall under this privilege and journalists would be wise to not simply rely on such statements as truth.

I think the opinion is unclear, however, about its objection to the PIO reciting the facts of the case.  As you can see above, the Court found that “the article went beyond official actions and proceedings. It included information about whether the cookie dough ordered through Mr. Burke was ever delivered and about whether the fundraising company received any funds.”  These particular facts may very well have been part of an indictment or information, which I think this Court would have found to be a public document.

You can read the entire opinion here.

Share this post:

WTVF and Scripps win Court of Appeals battle over TN reporting privileges

The Tennessee Court of Appeals entered an interlocutory Order today, granting a preliminary victory to WTVF and Scripps in their ongoing litigation with Nashville District Attorney Glenn Funk.  In so doing, the Court narrowed the parameters of the doctrine known as the “Fair Report Privilege” to provide more protection for journalists.  The Court also clarified how the Fair Report Privilege works when both it and Tennessee’s reporter’s shield are invoked by a news organization/journalist.

Here is what it means for the litigation:  Other than public records upon which WTVF’s Phil Williams relied, Funk cannot get access to Williams’ investigative files.  So, this is a nice win for the station (and reporting, in general).  This particular sliver of the larger dispute was over Funk’s discovery requests to WTVF and the station’s refusal to turn over certain material pertaining to its sources.  The trial court had ordered the station to turn the material over and the station appealed to the Court of Appeals to protect them from having to do it.

Here is what it means for the law:  If a news organization wants to defend against a defamation suit by claiming it was just reporting what was said at a city council meeting or what was alleged in a pleading, it will have to disclose those “sources,” but doing so will not require that news organization to turn over its investigative files or waive the protection of the shield law.

To thumbnail the background, Funk is suing the station, ownership group and reporter for defamation based on some other lawsuits about which Phil Williams had reported on WTVF.  Because Funk is a public figure, he has to prove actual malice in order to prevail.

In requesting the “source” materials from the station, he claimed he needed them to show actual malice.  In defending against these requests, the station raised two defenses.  First, the station said that everything Phil Williams reported came from public records or meetings and was therefore protected by Tennessee’s Fair Report Privilege.  Second, the station argued that Tennessee’s shield law protected it from being compelled to reveal its sources.

At the trial court level, these defenses got somewhat muddled and the Court of Appeals was left to separate the conflated issues.

To understand this, you have to start with the shield law.  Simply put, it basically protects a journalist from disclosing his source, unless the reporter blames the source for the material he publishes. Tenn. Code Ann. § 24-1-208(b).  If you blame your source (i.e., I was just reporting what my source told me), then you arguably have to disclose your source.

The Fair Report Privilege works a little differently.  It is a defense to a claim of defamation.  In essence, you (the journalist) are not defaming someone if your report is “of a public proceeding or official actions of government that have been made public, is a fair and accurate summary of the proceedings, and is balanced and neutral.  (Note:  The Court “amended” its earlier ruling in the Grant v. The Commercial Appeal, 2015 WL 5772524 (Tenn. Ct. App. 2015) case to remove the requirement that the report not be made with actual malice).

Because the Fair Report Privilege is actually a defense based on your source (i.e., I was just reporting what happened at the meeting, or what was said in the lawsuit), it comes very close to conflicting with the shield law.  Funk wanted to use this conflict to say the station could not rely on the shield law at all.  The Court noted in its Order today that:

We find that the trial court’s construction of subsection (b) of the statute results in the exemption’s swallowing up the protection that subsection (a) provides to media defendants whenever disclosure of a source is sought.  In most, if not all, cases, a news gatherer is going to rely on a “source of information” as the basis for his or her publication or broadcast.  According to the trial court’s ruling, any time a news gatherer defends a defamation claim by invoking the fair report privilege, the news gatherer loses the entire protection provided under section (a) of the Shield Law and must disclose every source collected, whether used in the story or not.

The Court resolved this apparent conflict the following way:

We believe a better interpretation would be to allow a media defendant to assert the fair report privilege while also subjecting to disclosure only the sources the media defendant identifies as the basis for the story.  In other words, once a news gatherer asserts the fair report privilege, the protections of section (a) of the Shield Law come into play to protect sources. To the extent that under the fair report privilege the news gatherer must indicate the source of the news report, that source loses its protected status under section (b) of the Shield Law and must be disclosed.  If “the source of any allegedly defamatory information” is one or more documents, the document(s) must be produced to the claimant.  This is the only way a court can compare the alleged source with the publication or broadcast to determine whether the news gatherer is, in fact, entitled to assert the fair report privilege as a defense to the claim for defamation, i.e., whether the publication or broadcast was a fair and accurate report of the proceeding or document and whether the report was balanced and neutral.

Other than the person or document(s) the news gatherer identifies as the source(s) of his or her publication or broadcast, however, section (a) of the Shield Law protects the news gatherer from having to produce any other information or documents from his or her investigative files.  The trial court’s order granting Mr. Funk’s motion to compel the Defendants to describe their investigations and produce all documents they obtained or relied on in their investigations of the two news stories is contrary to this interpretation of the statute.  Thus, we find the trial court erred when it granted Mr. Funk’s motion to compel.

(emphasis added).

Makes sense, right?  In layman’s terms, if WTVF wants to say it was just reporting what was said at a public meeting or in some other lawsuit, it has to disclose those sources, but doing so does NOT require WTVF to turn over its files or produce any non-public documents that may have contributed to the reporting.

You can read the Order here.

Share this post:

NYT reports how non-competes limit salary growth

The New York Times ran an overview piece on restrictive covenants this past weekend that provides an interesting read.  The piece is not focused on journalists and really only touches on the legal arguments at play, but does a great job of describing how these covenants limit an employee’s power to grow his income.

By giving companies huge power to dictate where and for whom their employees can work next, noncompetes take a person’s greatest professional assets — years of hard work and earned skills — and turn them into a liability.

“It’s one thing to have a bump in the road and be in between jobs for a little while; it’s another thing to be prevented from doing the only thing you know how to do,” said Max Burton Wahrhaftig, an arborist in Doylestown, Pa., who in 2013 was threatened by his former employer after leaving for a better-paying job with a rival tree service. He was able to avoid a full-blown lawsuit.

Click here to read the article.

Share this post:

Colorado newspaper threatens to sue over “fake news” accusation

NPR has a story about the dispute between the Daily Sentinel in Grand Junction, CO and a state senator who accused the paper of publishing “fake news.”  Evidently, the paper is consider suing for defamation (but has not yet filed suit).

A news outlet publishes a story that a Republican politician dismisses as “fake news.” Sounds familiar, right?

But in this case, there’s a twist. The Grand Junction Daily Sentinel in Colorado is accusing state Sen. Ray Scott of defamation and threatening to sue. If filed, legal experts said it would be the first suit of its kind, potentially setting a legal definition for what is considered fake news and what is not.

There are many reasons such an action may not be a satisfying endeavor for the paper, but it is an interesting concept because, in essence, the accusation has the effect of undermining the legitimacy of the paper’s product (which would arguably have a deleterious effect on its business).

Read the NPR.org article here.

Share this post:

Trump wins Twitter defamation action in NY

A New York judge has tossed a suit that claimed Donald Trump defamed a guest TV commentator in his tweets.

Trump’s “tweets about his critics, necessarily restricted to 140 characters or less, are rife with vague and simplistic insults such as ‘loser’ or ‘total loser’ or ‘totally biased loser,’ ‘dummy’ or ‘dope’ or ‘dumb,’ ‘zero/no credibility,’ ‘crazy’ or ‘wacko’ and ‘disaster,’ all deflecting serious consideration,” Jaffe wrote.

Read the rest of this article in the ABA Journal.

Share this post: