Seeking Reversal of an Erroneous Narrowing of the Work Product Doctrine 

This petition for certiorari sought review of an en banc decision by the First Circuit, which held that a corporation's tax reserve litigation assessment documents were not protected work-product because the documents were not prepared for trial and had been disclosed to an auditor pursuant to independent legal requirements. The majority opinion, written by Judge Boudin, is accompanied by a vigorous dissent authored by Judge Torruella (speaking for himself and Judge Lipez). In holding that the work-product doctrine only protects documents prepared for use in litigation, the en banc decision appears to read out of Fed. R. Civ. P. 26(b)(3)(A) the protection afforded documents prepared "in anticipation of litigation." Not only does this appear to be a blatant misreading of the rule, it also promises to have an adverse effect for business on the application of the work-product doctrine in a range of contexts.  With respect to the particular circumstances at issue in the Textron case itself, the new interpretation of work-product protection will, at the very least, chill issuer-auditor communications. Furthermore, the Textron holding deepens a circuit split on the application of work-product protection in circumstances like those in Textron.  For example, the Second Circuit has found work-product protection in circumstances analogous to those in Textron (as has the Massachusetts Supreme Judicial Court in a decision that notes favorably the First Circuit’s initial decision in Textron, which the en banc decision reversed (see Commissioner of Revenue v. Comcast Corp., 901 N.E. 2d 1185 (Mass. 2009)). As a result, companies with operations in more than one New England state will have a different federal work-product rule apply depending on whether they are with the jurisdiction of the First or Second Circuit.   

NELF filed an amicus brief in support of Textron urging the Supreme Court to review this en banc decision of the First Circuit. NELF argument supplemented Textron’s filing by asking the Supreme Court to consider:  (1) the unworkable implications of the Circuit split especially for businesses in the New England states; and (2) the en banc opinion’s flawed application of Rule 26(b)(3)(A). 

Despite the arguments made by Textron, NELF, and numerous other amici, the Supreme Court denied certiorari on May 24, 2010.

Battling Against Attempts to Thwart Permitting for Affordable Housing

This case concerns a municipality’s apparent attempt to thwart the operation of the comprehensive permit law by imposing extraordinary conditions on a comprehensive permit issued to a developer of affordable housing. The Massachusetts comprehensive permit act, G. L. c. 40B, §§ 20-23, encourages the construction of much-needed low- and moderate-income housing by allowing a developer to make a single, comprehensive application to the local zoning board of appeals (“board”) for all required permits.  If the board approves the comprehensive permit, it may make the permit subject to conditions.  If appealed to the Housing Appeals Committee (“HAC”), these conditions cannot be altered unless the HAC first finds that they render the project uneconomic.  

In this case the Amesbury board approved a comprehensive permit but imposed conditions dealing with subjects lying far outside the purview of individual local permitting authorities (like the building inspector) for whom the board substitutes under the act. When the developer appealed, the HAC struck the conditions as outside the scope of the Amesbury board’s power.  Amesbury then appealed to the courts under G. L. c. 30A, contending that there were no limits on the kinds of conditions it may impose and contesting the HAC’s power to strike conditions without first finding that they render the project uneconomic.  The trial court judge upheld the HAC’s decision, and the city appealed again. 

NELF filed an amicus brief in support of the developer.  NELF argued that while the statute describes the board’s power to impose conditions as “without limitation,” the power is unlimited only within the narrow range of traditional local concerns illustrated and described in the statute.  NELF argued that the HAC’s power to strike conditions when they stray outside these limits derives from three sources: statute, regulation, and agency adjudication.  NELF argued that the HAC’s long-established policy of removing such ultra vires conditions rests on implied and necessary agency powers granted by statute. NELF further argued when such policies are promulgated through HAC decisions, they are entitled to deference because they represent agency interpretations of affordable housing laws, including the agency’s own regulations.  

In its September 2010 decision, the SJC upheld the HAC’s removal of the conditions. The Court ruled that the act narrowly limits the board’s role to protecting traditional areas of local concern. The Court also found that the HAC, in removing the conditions, need not first find that they rendered the project uneconomic.  In explaining the legal basis for its decision, the Court closely followed the roadmap laid out in NELF’s brief not only in reasoning and citations but also occasionally even in wording.

Opposing Expansion of Employer Liability under the Massachusetts Maternity Leave Act

The legal issue addressed by NELF in this case (a legal malpractice action) was not whether a plaintiff-employee would have a claim against her employer for breaching a promise to allow her to take a longer leave that the eight weeks required by the Massachusetts Maternity Leave Act (“MMLA”), Mass. G. L. c. 149, § 105D.  Instead, the issue was whether the MMLA’s extraordinary remedies (including damages for emotional distress, punitive damages, and reasonable attorney’s fees), rather than ordinary contract damages, would apply if the employee proved such a breach.  


At the heart of the controversy was a guideline issued by the Massachusetts Commission Against Discrimination (“MCAD”), which provided that, when an employer agrees to a leave period longer than eight weeks, the MMLA’s statutory remedies would apply in the event of breach of that agreement unless the employer has given advance written notice that they would not.  NELF, joined in its amicus brief by Associated Industries of Massachusetts, argued that liability under the MMLA applies only to the eight weeks of statutory maternity leave, and that liability under the Act does not extend to any agreed-upon period of time beyond eight weeks.  

In its August 9, 2010 decision, the SJC embraced NELF’s reading of the MMLA.  The Court held that the statute expressly  defines maternity leave as a period of up to eight weeks and, therefore, that the statute does not apply to any agreed-upon leave that exceeds eight weeks.  While an employee alleging breach of such an agreed-upon leave may indeed have a claim for breach of contract, the employee would have no claim under the MMLA.  As the Court explained succinctly, “[t]he language of the MMLA is clear and unambiguous. . . . Once a female employee is absent from employment for more than eight weeks, she is no longer within the purview of the MMLA and, consequently, is not afforded the protections conferred by the statute. . . . A female employee is only entitled to MMLA rights when she is absent from employment for no more than eight weeks.”  Accordingly, the court declared that the MCAD guideline is invalid to the extent it suggests that female employees may have MMLA rights beyond the first eight weeks of an authorized maternity leave. 

Seeking to Protect Individual Property Rights from Uncompensated Judicial Taking

The question before the Supreme Court in this case was whether the Florida supreme court effected a “judicial taking” in violation of the Fifth and Fourteenth Amendments to the U.S. Constitution by departing abruptly in its decision from its own precedents and eliminating a vested property right without providing just compensation.  

The Florida court held that the individual members of Stop the Beach Renourishment, Inc., a coalition beachfront property owners, did not have the right of accretion, i.e., the gradual seaward growth of the shoreline, or the right of direct contact with the water.  Therefore, the Florida court concluded that the property owners were not entitled to compensation when the state implemented a beachfront erosion control project that eliminated both their access to the water and ownership of any future accreted shoreline.  In its amicus brief in support of the property owners, NELF urged the Court to recognize the doctrine of  judicial taking, first articulated in Justice Stewart’s powerful concurrence in Hughes v. Washington, 389 U.S. 290 (1967), and hold that where, as here, a state court departs abruptly and unforeseeably from clear precedent and eliminates well-established property rights, that  decision constitutes a taking requiring just compensation under the Fifth and Fourteenth Amendments.  

NELF argued, inter alia, that, although normally the highest state court is the final arbiter of a state’s property laws, the Court’s adoption of Justice Stewart’s judicial taking analysis in this case would be consistent with the general and time-honored principle that state courts may not circumvent the Constitution by invoking purported state-law grounds that actually lack “fair or substantial support” in state law and therefore constitute state judicial evasion of federal rights.  

While the Supreme Court, in its June 17, 2010 decision unanimously affirmed the Florida Supreme Court’s decision, the Court did not reject NELF’s arguments.  Rather, its decision in the case was based on the conclusion that, even if the doctrine of judicial taking were recognized, no taking had occurred in the case, because the Court found that the property owners’ littoral rights were not superior to the state’s right to fill in its submerged land.  Of the eight Justices participating in the decision, four would have expressly recognized the judicial taking doctrine; the other four declined to reach the issue because it was not necessary to the outcome of the decision.

Preventing Disclosure of Trade Secrets and Other Confidential Business Information to Competitors

With its decision in this case, issued on August 10, 2010, the Connecticut Supreme Court has provided much-needed clarity on an issue of great concern to all who do business in the state, namely the scope of protection provided under state law for confidential business information subpoenaed by the state’s Attorney General (“AG”) during an antitrust investigation.   

Connecticut Antitrust Statute § 35-42 authorizes the AG to demand, prior to filing a lawsuit, written and oral discovery from “any person” (including, as in this case, third parties not suspected of violating the law) when the AG has “reason to believe” that an antitrust violation has occurred.  The statute also provides that any subpoenaed materials “shall not be available to the public.”    In this case, in an insurance industry investigation, the AG subpoenaed as a witness Brown & Brown, an insurance intermediary that provides insurance and reinsurance products and services. Seeking to protect its subpoenaed confidential information from disclosure, Brown & Brown attempted to negotiate with the AG for a protective order.  The AG, however, asserted that, despite the express language of the statute, he was not prevented from disclosing a subpoenaed business’s confidential information to third parties in the course of his investigation (e.g., as an exhibit shown to a witness at a deposition).  In the face of the AG’s refusal to agree to any protection for its subpoenaed information, Brown & Brown sued the AG in state court, seeking a declaration that the statute barred the AG from disclosing any of its subpoenaed materials to anyone outside the AG’s office.  The trial court denied Brown & Brown’s motion for summary judgment, and Brown & Brown appealed to the Connecticut Supreme Court.  

NELF filed an amicus briefs in support of Brown & Brown both at the trial and appellate levels, arguing that the plain meaning of the statute’s injunction that subpoenaed materials “shall not be available to the public” is that custody of and access to the materials are restricted solely to the AG’s office and that, therefore, the statute bars anyone else from gaining access to the materials without the targeted business’s consent.  NELF pointed out that this reading of the statute strikes a reasonable balance by allowing the AG broad access to confidential information in the broad exercise of its unreviewable, pre-suit investigatory powers, but precluding the AG from sharing that information with others, thereby preventing potentially irreversible damage to a business’s stability and growth.  

In its decision, the Connecticut Supreme Court, embracing many of NELF’s arguments, reversed the trial court’s decision and held that the Act bars the AG from disclosing subpoenaed materials to anyone else (other than federal or state law enforcement officials, as provided by the Act, so long as they agree to maintain the strict confidentiality of the materials).  The Court agreed with NELF that the clear meaning of the statutory language restricted both custody and access exclusively to the AG, and further agreed with NELF that this legislative choice reflected a careful balance between the needs of government investigations and the proprietary concerns of the business community.  The court explained:  “[A]lthough [the legislature] granted broad investigatory powers to the [AG] to pursue antitrust violators, [it] also intended to afford counterbalancing protections to investigatory targets in recognition of the potential sensitivity of internal business information and the fact that the defendant's investigation need not be founded on any specified level of suspicion and, ultimately, might result in no allegations of wrongdoing.” 

Defending the Business Judgment Rule in Massachusetts

Responding to a question certified to it by the Second Circuit, the Massachusetts Supreme Judicial Court confirmed, in a decision issued on August 23, 2010, that a corporation may seek dismissal of a shareholder derivative suit based on the business judgment doctrine after suit has been filed. The plaintiff, whose demand was ultimately rejected by the board of directors of the Massachusetts business trust on whose behalf his suit had been filed, sought to draw a negative inference from what the SJC in its opinion recognized was unfortunate language in Mass. G.L. c. 156D (the statute that in 2003 codified, inter alia, the rules governing shareholder derivative claims), to argue that the statute required the board of directors to exercise its business judgment and refuse the demand before he filed suit.  He relied for support on Mass. G. L. c. 156D, § 7.44(a) which provides that “[a] derivative proceeding commenced after rejection of a demand shall be dismissed by the court on motion by the corporation if the court finds that [the board of directors] has determined in good faith after conducting a reasonable inquiry upon which its conclusions are based that the maintenance of the derivative proceeding is not in the best interests of the corporation[.]”  (Emphasis added.)  Plaintiff also relied on § 7.42 of the statute, which generally gives shareholders the right to file suit 90 days after making written demand on the corporation.  

NELF argued in its amicus brief in support of the defendants that, despite the isolated phrase “after rejection” in the business judgment provision, a consideration of all of the relevant provisions of c. 156D, including the drafters’ comments, defeats plaintiff’s interpretation and clearly allows a corporation’s board of directors to obtain dismissal of a shareholder derivative suit based on a post-suit rejection of a shareholder’s demand.  Among its arguments, NELF pointed to the stay provision in the statue, § 7.43, which  authorizes a court to stay a derivative suit to allow a board to conclude its inquiry into the allegations made in the demand or complaint beyond the 90 days provided in § 7.42. Moreover, the comment to that provision expressly states that a stay would be appropriate where a board needs more time to complete its inquiry after a complaint is filed.  Perhaps most significantly, the drafter’s comment to § 7.44 itself expressly states, contra to the “after rejection” language in that provision giving rise to the certified question in this case, that a board can reject a shareholder demand either before or after a derivative suit has been filed.  

In its unanimous decision, the SJC embraced NELF’s interpretation of the Act, concluding that the Legislature expressly intended to allow a corporation’s board to seek dismissal of a shareholder derivative suit based on a post-suit refusal of the demand underlying the suit.  The Court agreed with NELF that, notwithstanding the “after rejection” language,  “[t]he language in various other provisions of the Act [and] language within [the provision containing the “after rejection” language] itself, clearly indicates that the Legislature intended that a corporation should be entitled to dismiss a derivative proceeding under the business judgment doctrine regardless whether the corporation’s rejection of the shareholder’s demand precedes or follows the filing of the derivative suit.”