Tuesday, November 4, 2014

Aleynikov's Observations on Juries

Jurors called to serve look forward to the possibility of drawing an exciting (even if tragic) case.

Non-compete cases are not exciting.

At least by the average layperson's standard.

This is why the specter of a jury trial may cause parties to rethink whether to take the case to trial. From a plaintiff's perspective, it could fear that it will put the jury to sleep explaining a legitimate business interest and the importance of profit margins. And there is the almost inevitable risk that the jury will be flummoxed by an esoteric, confusing damages presentation. Defendants often harbor the same doubts about jury trials, because one or two bad facts could case a jury to form an opinion on liability quickly and then take the plaintiff's mere say-so as evidence.

Consider this from the trial of Sergey Aleynikov, as recounted in Michael Lewis's book Flash Boys: "...when [Aleynikov] looked over, he saw that half the jury appeared to be sleeping." Aleynikov, as we know, was the programmer who left Goldman Sachs' high-frequency trading desk for Teza Technologies - and, in doing so, brought on a slew of litigation that seemingly touched every jurisdiction on the East Coast. And Aleynikov's case had that dose of intrigue that most competition cases don't - computer code deposited in Germany and the specter of Wall Street trading.

Employers often combat the uncertainty of a jury trial with a contractual waiver (enforceable in federal courts and in most states) or a clause requiring the merits to be dealt with in arbitration. The former preserves the availability of appellate review, while the latter allows for companies to conduct their disputes in a quasi-private manner and with more control over the process.

An interesting question, which seems to have generated almost no decisions, is whether a third-party is bound by a jury trial waiver clause. Suppose an employee waives his right to a jury trial, but his new employer is a defendant on a related tort claim for inducing a non-compete violation. Can the plaintiff invoke the jury trial waiver against the third-party?

I don't think so.

Although there is some authority for extending choice-of-law and choice-of-venue clauses to non-parties, jury trial waivers seem different. For one, the right to a jury trial is embodied in the Constitution, though not incorporated to the States. In addition, state constitutions typically have some additional constitutional guarantee. Therefore, the nature of the right seems qualitatively different - even if for reasons that don't appear to extend beyond mere tradition alone.

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