You are on page 1of 9
PEOPLE OF THE STATE OF NEW YORK OFFICE OF THE ATTORNEY GENERAL LABOR BUREAU INTHE MATTER DF THE INVESTIGATION OF ASSURANCE OF ERICT. SCHNEIDERMAN, ATTORNEY. DISCONTINUANCE GENERAL OF THE STATE OF NEW YORK. PURSUANT TO ECUTIVE LAW § 63(15) oF PORTFOLIO MEDIA, INC. AOD No. 16-106 ASSURANCE OF DISCONTINUANCE Inthe fll o£ 2015, the Office of the Attomey General of the State of New York (Attomey General” or “OAG") commenced an investigation of ww aw360,com, a legal ‘news website wholly owned and operated by Portfolio Media, Ine., pursuant to New York Executive Law § 63/12). This Assurance of Discontinuance (“Assuranes") contains the Attomey General's findings in connection with his investigation, and the relief agreed to by the Atlomey General and Portfolio Media, In. EVAN MEWORK 1. A-nos-compete agreement is a contract that prohibits an employee from working fora competing employer within a certain period oF time after leaving his or her job." In New ‘York, a non-compete agreement is enforceable only “Yo the extent that its reasonable in time and area, necessary» protect the employer's legitimate interests, not harmful to the general public and not unreasonably burdensome to the employee.” Reed, Roberts Associates, In. v, ‘Srauman, 40 N.Y.24 303, 307 (NY. 1976). The policy considerations underlying the “judicial Llisfavor” of such agreements revolve around the importance of “competition engendered by the "Now-ConpeteAgsceneis- Atay ofthe Use, Poel Isis. and State Resse.” May 2016, valle a ‘sas uhchuns go ss at ited May 11,2046), PORTYOLIO MEDIA INC. - ASSURANCE OF DISCONTINUANCE - PAGE L Uuninhibited flow of services, talent and ideas.” Kd. As such, 2 non-compete agreement that “does ‘no more than baldly restrain competition” is unenforceable. Columbia Ribbon & Carhon Mii, Cov. Acl-A Coup, 42 N.Y.24 496, 499 (N.Y. 1977), Further, the issue of what comprises an ‘employer's “legitimate interests” is interpreted narrowly 2. Pursuant so New York Executive Law § 63(12). the Attorney General has broad investigatory authority to protect the interests of New York workers consumers, and the general Public, and 10 ensure public safety and welfare FINDINGS: 3. Portfolio Medi, Ine. operates www ("LaW340"). «website that provides legal news and analysis to subscribers? Law360's main office is in New York City. fa the fall of 2015, the OAG began an investigation of Law340's use of non-compete. As part of the investigation, the OAG served a subpoena duces tect and ad festifcandum in December 2015. Law360 cooperated in producing documents responsive to the subpoena. Those documents ‘revealed that snee 2011, Law360 has roquted all senior staff and all editorial stat sign an agreement containing 9 Covenant Not to Compete (“Non-Compete”) asa condition of ‘employment, Senior sta consists ofthe General Manager, Ditector of Sales, Sales Manager, Senior Director of Product Engineering, Senior Human Resources Manager, General Counsel Assistant Director of Product Marketing, Assosiate Director of Marketing Services, and Chief Financial Officer positions. Editorial staff consists of the Editor in Chief, Administrative Assistant, Managing Editor, Assistant Managing Editor, Senior Reporter, Reporter, Third Party Content, Copy Chie, Training Editor, - Graphies Chief, Senior Graphies Editor, and News Assistant positions. Law360 currently employ’ approximately 157 senior and editorial staff ‘While Porflio Medi. fs he legal erty blige oli th tm of shi Asurance, Lay340 isthe entity ‘shih he OAG's nestgation forte Ths, hs Aas the atl Seta ofthe investigation eer [a6 andthe legal gation relero ws oaner, Poole Medi. ae. PORTFOLIO MEDIA INC. ASSURANCE OF DISCONTINUANCE PAGE 2 4. The Non-Compete prohibits al senior and editorial ste, for one year ater leaving Law360 and in any geographical area where Law360 conducts busines, from working for a“Direct Competitor.” where “Direet Competitor” is defined as “any person or entity. hich directly competes with (or has taken afimative steps in proposing or planing 1 compete ‘with the Company in providing legal news and data services, or engages in other business activites identical, substantially similar, or reasonably reat, in whole or in prt tothe Business Activites engaged i, oF under development by the Company.” and where “Business Activities ate defined as “the development, production, publication, marketing, design, and sale" of daily legal news and data services. 5. During the investigation, the OAG also interviewed sever rank-and-file editorial cmployees, all of whom reported to the OAG tht they have litle to no knowledge of any trade secrets or confident information regarding the technology that underpins Law360"s operations 6. During the investigation, Laye360 reported that it took steps to enforce the Non- ‘Compete narrowly and in limited manner designed 10 protect its competitive interests, and that it heieved it was protecting confidential and strategically sensitive information. PROSPECTIVE RELIEF WHEREAS, The Attomey General has conclud thatthe Non-Compete is overly broad ‘with regard to certain Law360 employees, because it does not meet the criteria set forth in Rea, Roberts Associates, ine. v. Stauman, 40 N.Y.2U 303 (N.Y. 1976) (ee supra paragraph 1): WHEREAS, Portfolio Media, Inc. neither admits nor denies the Attorney General's Findings and conclusion as set forth aboves WHEREAS. the parties wish to obviate further investigation and to avoid the expense sand inconvenience o* potential litigation; PORTFOLIO MEDIA INC. ASSURANCE OF DISCONTINUANCE - PAGE? WHEREAS, the Attomey Generali willing to accept the tens ofthis Assurance ‘pursuant to New Yerk Executive Law § 63(15) and to discontinue his investigation of Portfolio. Media, Ine and WHEREAS, the panties believe that he obligations imposed by this Assurance are -praent and appropyite ITIS HEREBY UNDERSTOOD AND AGREED, by and between Portfolio Medi, Ine. and the OAG, a flows: 7. Lawi60 shall discontinue is use of the Non-Compete, oF any other non-compete, ‘with respect to all current and former editorial employees, withthe exception of individuals curently holding the Falitor ‘ef, Managing Editor aud Graphies Chief positions. Following the signing ofthis Assurance and for a peviod of three yeas thereafter (the “Term” ofthis Assurance), Law360 will notify the OAG thirty (30) days in advance oF offering any edit employees, with the exception of the positions of Editor-in-Chief, Managing Editor, and pies Chief, with an agreement containing the Non-Compete or any other non-compete, 8, Nothng inthis Assurance prohibits Law360 from requiring non-editrial senior stato sign the Non-Compete, including employees holding the positions of General Manager, Director of Sales, Seles Manager. Senior Director of Product Engineering, Senior Human Resources Manager, General Counsel, Assistant Director of Product Marketing. Associate Director of Marketing Services, and Chiet Financial Officer. Law's Staff Accountant, who had previously been designated a member of senior staf, shall no longer be subject to the Non- Compete. 9. Within iteen (15) business days of signing this Assurance, Law360 shall send a PORTFOLIO MEDIA, INC. - ASSURANCE OF DISCONTINUANCE - PAGE notice to all current employes and t all former emplayees whose termination (whether ‘voluntary or involuntary) occured within the twelve-month period preceding the signing ofthis Assurance, Such novice shall inform such employees thatthe Non-Compete is no longer in effect, 4s described above in paragraphs 7 and 8. Law360 shall provide such notice by e-mail to former employees last knowin email adress, except that if Law360 doesnot have a current email ares for any former employee, such noice shall be provided by regular US. postal service to their ast known U.S, postal adress, Within five (S) business days of the completion of sending such notices, Law30 shall send a confirmation to the OAG that the notice has been sent as ‘required hy this parsgraph, Sixty (60) days subsequent to signing this Assurance, Law 360 shall provide to the OAG the names of any former employees for whom notice was returned as undeliverable ther by e-mail or U.S, mai. 10. Law360 shall not use the Non-Compete of any non-compete with respect to new