The SJC has spoken.
In a decision issued moments ago in Miele v. Foundation Medicine, Inc., the SJC stated:
a forfeiture clause triggered by a breach of a nonsolicitation agreement does not constitute a “forfeiture for competition agreement” subject to the act. We remand the matter to the Superior Court with instructions to reverse the order partially granting Miele’s motion for judgment on the pleadings.
This is a significant decision confirming the limited focus and scope of the Massachusetts Noncompetition Agreement Act (the MNAA). For details of the case and issue, see my prior blog posts discussing the case.
Relatedly, I am very pleased to report that the SJC cited and drew points from an amicus brief that my firm filed:
Although clear statutory language ordinarily obviates the need to resort to rules of interpretation, . . . legislative history may be referenced by way of supplementary confirmation of the intent reflected in the words used” (citation omitted). Petrucci v. Board of Appeals of Westwood, 45 Mass. App. Ct. 818, 8 822 n.7 (1998). As discussed in the amicus brief submitted by Russell Beck, the act “was shaped” in part by concerns espoused in Cheney, 377 Mass. 141. In Cheney, the court cautioned that, if restrictions on covenants not to compete were not also applicable to forfeiture for competition clauses, employers might circumvent such restrictions by using the latter instead of the former. Id. at 147 n.7. Thus, any reform to the law governing the enforceability of noncompetition agreements would have to account for such a possibility — and the act did just that. Specifically, to address this concern, the Legislature explicitly defined noncompetition agreements to include such forfeiture provisions. As a result, every forfeiture for competition agreement falls within the act’s definition of a noncompetition agreement, and its scope is necessarily limited by the broader statutory definition. Accordingly, because a “noncompetition agreement” under the act applies only to “activities competitive with” the employer, the term “competitive activities” within the definition of a forfeiture for competition agreement must be construed as coextensive with — or narrower than — the scope of “activities competitive with” the employer.
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A huge thank you to my entire firm — including, in particular, Steve Riden, Nicole Daly, Sarah Tishler, and Erika Hahn — for all their help with the amicus brief.