SJC to Address Chapter 93A Liability in Employment Case Involving Unfair Business Practices

The SJC will hear oral argument on January 6 in a case that bears watching, as it may clarify, and potentially expand, the reach of Chapter 93A to disputes arising out of the employment context. The case, Governo Law Firm v. Bergeron, will address the applicability of Chapter 93A, which entitles the prevailing plaintiff to attorneys’ fees and potentially multiple damages, to a rather common scenario: when an employee leaves one company to start a competing company and wrongfully takes the former employer’s property. Chapter 93A does not apply to intra-company disputes, including those between employers and employees. However, there is a gray area where, as in this case, the employees’ wrongful conduct took place in furtherance of a competing business and involved the use of the misappropriated property (files and databases) in the new business. The jury returned a verdict against the defendants on a claim of conversion, and awarded single damages, but found in defendants’ favor on the 93A claim. The thrust of the Governo Law Firm’s challenge relates to the judge’s jury instruction on the relevance of the employees’ pre-resignation conduct to the 93A claim. There is also a challenge to the trial court’s refusal to award statutory prejudgment interest (a hefty 12% per annum) on the grounds that the judgment was not for compensatory damages suffered by the plaintiff, but rather disgorgement of money earned by the defendants. As a commercial litigator, clarity on one or both of these issues would be most welcome. Stay tuned.