Case Study - Achiever Papers

Please read the case DCS Sanitation Management v. Eloy Castillo (and supporting notes), linked in the reference below:DCS Sanitation Management v. Castillo, 435 F.3d 892, (8th Cir. 2006). ATTACHED

Once you have read and reviewed the case scenario, respond to the following questions:

Discuss the legal implications for employers and employees for requiring employees to sign noncompete agreements. What factors did the court consider in making its decision? Compare and contrast Ohio and Nebraska’s positions on noncompete clauses.
Which state’s laws support ethical reasoning in the resolution of this case?

Your response should be a minimum of two pages in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying APA style citations.

Castagnera, P.J.C.J. O. (2016). Employment and Labor Law. [VitalSource Bookshelf]. Retrieved from https://online.vitalsource.com/#/books/9781305893597/

DCS Sanitation Mgmt. v. Castillo, 435 F.3d 892, 2006 U.S. App. LEXIS 1758, 152 Lab. Cas. (CCH) P60,135, 23 I.E.R. Cas. (BNA) 1772 (United States Court of Appeals for the Eighth CircuitJanuary 25, 2006, Filed ). https://advance-lexis-com.libraryresources.columbiasouthern.edu/api/document?collection=cases&id=urn:contentItem:4J44-6R60-0038-X2H9-00000-00&context=1516831.

urgentcase study2 pages

Date and Time: Tuesday, January 26, 2021 9:40:00 PM EST

Job Number: 135042646

Document (1)

DCS Sanitation Mgmt. v. Castillo

, 435 F.3d 892

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DCS Sanitation Mgmt. v. Castillo

United States Court of Appeals for the Eighth Circuit

October 14, 2005, Submitted ; January 25, 2006, Filed

No. 05-1201

Reporter
435 F.3d 892 *; 2006 U.S. App. LEXIS 1758 **; 152 Lab. Cas. (CCH) P60,135; 23 I.E.R. Cas. (BNA) 1772

DCS Sanitation Management, Inc., Appellant, v. Eloy
Castillo; Efren George Castillo; Adolfo Martinez,
Appellees.

Subsequent History: Rehearing denied by, Rehearing,
en banc, denied by DCS Sanitation Mgmt. v. Castillo,
2006 U.S. App. LEXIS 8154 (8th Cir., Apr. 4, 2006)

US Supreme Court certiorari denied by DCS Sanitation
Management, Inc. v. Castillo, 2006 U.S. LEXIS 7161
(U.S., Oct. 2, 2006)

Prior History: [**1] Appeal from the United States
District Court for the District of Nebraska.

Core Terms

former employee, noncompete, district court, parties,
noncompete agreement, overly broad, cleaning, plant,
fundamental policy, moot, preliminary injunction,
cleaning service, do business, choice-of-law, injunctive,
soliciting, courts

Case Summary

Procedural Posture
Appellant former employer challenged a decision from
the United States District Court for the District of
Nebraska, which denied its motion for a preliminary

injunction and granted summary judgment to appellee
former employees in a case alleging a violation of a
noncompete agreement.

Overview

As a condition of employment, the employees each
signed employment agreements containing a
noncompete clause. The contract also contained a
choice of law provision. After the employees were hired
by another company, the employer filed an action for
breach of contract. The district court denied the
employer injunctive relief, and it granted the employees
summary judgment. Thereafter, the employer sought
review. In affirming, the court determined that, although
the one-year time frame in the agreement had expired,
the claim for money damages was not moot. However,
the request for injunctive relief was moot. Next,
Nebraska law applied, notwithstanding the fact that the
agreement provided for the application of Ohio law.
Because the laws of each state with regard to
noncompete agreements were so diverse, the district
court properly found that the application of Ohio law
would violate the public policy of Nebraska. Moreover,
Nebraska had a greater material interest in the
agreements. Finally, the agreements were invalid under
Nebraska law because they were overly broad; the
employees were prohibited from working for any
cleaning service within 100 miles for one year.

Outcome
The decision was affirmed.

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LexisNexis® Headnotes

Civil
Procedure > Remedies > Injunctions > Preliminary
& Temporary Injunctions

Labor & Employment Law > … > Conditions &
Terms > Trade Secrets & Unfair
Competition > Noncompetition & Nondisclosure
Agreements

Civil
Procedure > … > Justiciability > Mootness > Real
Controversy Requirement

HN1[ ] Injunctions, Preliminary & Temporary
Injunctions

Under Nebraska law, when a noncompete agreement’s
time period runs out, an appeal from the denial of a
preliminary injunction is moot. Although an appeal from
a denial of injunctive relief may become moot by the
passage of time, a claim for damages remains viable.

Civil Procedure > Appeals > Standards of
Review > De Novo Review

Civil Procedure > … > Federal & State
Interrelationships > Choice of Law > General

Overview

HN2[ ] Standards of Review, De Novo Review

A district court sitting in diversity jurisdiction applies the
conflict of law rules for the state in which it sits. An
appellate court reviews de novo the district court’s
choice-of-law determination.

Business & Corporate Compliance > … > Contracts
Law > Contract Conditions & Provisions > Forum
Selection Clauses

Civil Procedure > … > Federal & State
Interrelationships > Choice of Law > General
Overview

HN3[ ] Contract Conditions & Provisions, Forum
Selection Clauses

Nebraska courts generally give effect to the parties’
choice of law. The law of the state chosen by the parties
to govern their contractual rights and duties will be
applied if the particular issue is one which the parties
could have resolved by an explicit provision in their
agreement directed to that issue. The parties’
contractual choice of law will apply unless (1) the
chosen state has no substantial relationship to the
parties or the transaction and there is no other
reasonable basis for the parties’ choice, or (2)
application of the law of the chosen state would be
contrary to a fundamental policy of a state which has a
materially greater interest than the chosen state in the
determination of the particular issue and which would be
the state of the applicable law in the absence of an
effective choice of law by the parties. The second part
applies only when the first part does not govern.

Civil Procedure > … > Federal & State
Interrelationships > Choice of Law > General
Overview

HN4[ ] Federal & State Interrelationships, Choice
of Law

Under the second part of the test for choice of law
cases, application of the chosen law is precluded if
application of the law of the chosen state would be
contrary to a fundamental policy of a state which has a
materially greater interest than the chosen state when
certain factors are applied.

Labor & Employment Law > … > Conditions &
Terms > Trade Secrets & Unfair
Competition > Noncompetition & Nondisclosure
Agreements

HN5[ ] Trade Secrets & Unfair Competition,
Noncompetition & Nondisclosure Agreements

Nebraska and Ohio courts have materially different
approaches to the reformation of unreasonable
noncompete agreements. In Nebraska, if a court
determines a noncompete agreement is unreasonable,
the court will not reform the noncompete agreement in

435 F.3d 892, *892; 2006 U.S. App. LEXIS 1758, **1

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order to make it enforceable. Contrary to the Nebraska
courts’ approach, Ohio courts are empowered to reform
overly broad or unreasonable noncompete agreements
to make them reasonable. Because Nebraska courts
expressly have rejected judicial reformation of
noncompete agreements, application of Ohio law would
violate a fundamental policy of Nebraska law.

Civil Procedure > … > Federal & State
Interrelationships > Choice of Law > General
Overview

HN6[ ] Federal & State Interrelationships, Choice
of Law

In the absence of an effective choice of law by the
parties, the contacts to be taken into account in applying
the principles of to determine the law applicable to an
issue include: (a) the place of contracting, (b) the place
of negotiation of the contract, (c) the place of
performance ,(d) the location of the subject matter of the
contract, and (e) the domicile, residence, nationality,
place of incorporation and place of business of the
parties. These contacts are to be evaluated according to
their relative importance with respect to the particular
issue.

Labor & Employment Law > … > Conditions &
Terms > Trade Secrets & Unfair
Competition > Noncompetition & Nondisclosure
Agreements

HN7[ ] Trade Secrets & Unfair Competition,
Noncompetition & Nondisclosure Agreements

Pursuant to Nebraska law, a noncompete agreement is
valid if it is (1) not injurious to the public, (2) not greater
than is reasonably necessary to protect the employer in
some legitimate interest, and (3) not unduly harsh and
oppressive on the employee. An employer has a
legitimate business interest in protection against a
former employee’s competition by improper and unfair
means, but is not entitled to protection against ordinary
competition from a former employee. A noncompete
agreement may be valid only if it restricts the former
employee from working for or soliciting the former
employer’s clients or accounts with whom the former
employee actually did business and has personal
contact.

Counsel: For DCS SANITATION MANAGEMENT, Inc.,
Plaintiff – Appellant: Michael P. Schmiedt, CRARY &
HUFF, South Sioux City, NE; Daniel L. Hartnett, CRARY
& HUFF, Sioux City, IA; James E. McCarthy, III, KATZ &
TELLER, Cincinnati, OH.

For ELOY CASTILLO, EFREN GEORGE CASTILLO,
ADOLFO MARTINEZ, Appellees: James Conrad
Zalewski, DEMARS & GORDON, Lincoln, NE.

Judges: Before RILEY, JOHN R. GIBSON, and
COLLOTON, Circuit Judges.

Opinion by: Riley

Opinion

[*894] RILEY, Circuit Judge.

DCS Sanitation Management, Inc. (DCS) sued three of
its former employees, Eloy Castillo, Efren George
Castillo, and Adolfo Martinez (collectively, former
employees), alleging the former employees breached
noncompete agreements. DCS appeals the district
court’s 1 denial of DCS’s motion for a preliminary
injunction and grant of summary judgment in favor of the
former employees. We affirm.

[**2] I. BACKGROUND

DCS, a Delaware corporation with its principal place of
business in Ohio, cleans food processing plants in
thirteen states, including Nebraska. DCS’s corporate
office in Ohio (1) formulates processes and procedures
to improve cleaning crew efficiency, (2) designs
sanitation and safety programs for all cleaning crews,
(3) makes staffing decisions for all cleaning crews, and

1 The Honorable Laurie Smith Camp, United States District
Judge for the District of Nebraska.

435 F.3d 892, *892; 2006 U.S. App. LEXIS 1758, **1

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(4) makes human resource policies and decisions for all
DCS employees.

The former employees worked for DCS as on-site
managers at the Tyson Foods plant in Dakota City,
Nebraska (Tyson plant). The former employees (1) had
access to DCS’s staffing, sanitation, and safety
programs, including the allocation and monitoring of
proper chemical dilutions; (2) were responsible for
enforcing regulatory safety requirements and satisfying
third party audit requirements; (3) were familiar with
staffing requirements for cleaning the Tyson plant; and
(4) had knowledge of the Tyson plant’s key contacts and
business requirements.

As a condition of employment with DCS, each of the
former employees signed identical employment
agreements (Agreements) with DCS. The Agreements
contained the following noncompete provision: [**3]

NONCOMPETITION AFTER TERMINATION: For a
period of one (1) year following the date of
termination of employment for any reason, I will not
directly or indirectly engage in, or in any manner be
concerned with or employed by any person, firm, or
corporation in competition with [DCS] or engaged in
providing contract cleaning services within a radius
of one-hundred (100) miles of any customer of
[DCS] or with any customer or client of [DCS] or
any entity or enterprise having business dealings
with [DCS] which is then providing its own cleaning
services in-house or which requests my assistance
or knowledge of contract cleaning services to
provide its own cleaning services in-house. In the
event of violation of this covenant, [DCS], in
addition to any other rights and remedies available
at law or otherwise, is entitled to an injunction to be
issued by a court of competent jurisdiction enjoining
and restraining employee from committing any
violation of this provision and employee hereby
consents to the issuance of the injunction.

The Agreements also contained a choice-of-law
provision: “APPLICABLE LAW: This Agreement shall be
subject to and interpreted in [**4] accordance with the
laws of Ohio.”

In June 2003, after DCS cleaned the processing side of
the Tyson plant for eighteen years, the Tyson plant
solicited bids from competing cleaning companies. As a
result of the bidding process, on September 18, 2003,
the Tyson plant selected Packers Sanitation Services,
Inc. (Packers) for the cleaning contract. Packers [*895]
hired all of DCS’s employees, including the former

employees, and on November 8, 2003, Packers started
cleaning the Tyson plant.

On May 14, 2004, DCS sued the former employees,
alleging (1) breach of the noncompete agreements, (2)
a “substantial probability” the former employees would
disclose DCS’s trade secrets and confidential
information, and (3) breach of contract. DCS sought (1)
to enjoin the former employees in accordance with the
noncompete agreements, (2) to enjoin the former
employees from disclosing DCS’s trade secrets and
confidential information, and (3) money damages.

DCS moved for a preliminary injunction, and the former
employees moved for summary judgment. The district
court denied DCS’s motion for a preliminary injunction
and granted summary judgment in favor of the former
employees, concluding Nebraska has a materially [**5]
greater interest in the noncompete agreements at issue,
and application of Ohio law would violate a fundamental
policy of Nebraska law. The district court thus applied
Nebraska law to determine the validity of the
noncompete agreements and concluded the
noncompete agreements were overbroad and,
therefore, unenforceable.

DCS appeals the district court’s ruling, urging this court
to reverse the district court’s entry of summary judgment
and denial of a preliminary injunction, and to remand
with instructions to enjoin the former employees under
Ohio law. DCS argues reversal and remand is
warranted here, because (1) the district court erred in
applying Nebraska law instead of Ohio law, (2) the
noncompete agreements are enforceable under Ohio
law, and (3) the district court abused its discretion in
denying injunctive relief for the period of the covenant
from the date of the court’s order. In response, the
former employees contend (1) the appeal is moot, (2)
the district court correctly applied Nebraska law, (3) the
noncompete agreements are overly broad and
unenforceable, and (4) the noncompete agreements are
contracts of adhesion.

II. DISCUSSION

A. Mootness

The former [**6] employees contend this appeal is
moot, because the one-year time frame of the
noncompete agreements has expired. See Agrigenetics,

435 F.3d 892, *894; 2006 U.S. App. LEXIS 1758, **2

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Inc. v. Rose, 62 F.3d 268, 270-71 (8th Cir. 1995)
(holding, HN1[ ] under Nebraska law, when a
noncompete agreement’s time period runs out, an
appeal from the denial of a preliminary injunction is
moot). Although an appeal from a denial of injunctive
relief may become moot by the passage of time, a claim
for damages remains viable. See Curtis Indus., Inc. v.
Livingston, 30 F.3d 96, 97 (8th Cir. 1994). Because
DCS sought money damages in addition to injunctive
relief, this appeal is not moot.

B. Choice-of-Law Determination

DCS argues the district court erred when it evaluated
DCS’s claim under Nebraska law rather than Ohio law,
because the Agreements specify Ohio law governs.
HN2[ ] A district court sitting in diversity jurisdiction
applies the conflict of law rules for the state in which it
sits. Inacom Corp. v. Sears, Roebuck & Co., 254 F.3d
683, 687 (8th Cir. 2001) (citing Klaxon Co. v. Stentor
Elec. Mfg. Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 85 L.
Ed. 1477 (1941)). Thus, we apply Nebraska’s conflict of
law [**7] rules and review de novo the district court’s
choice-of-law determination. Id.

In deciding choice-of-law questions, Nebraska follows
the Restatement (Second) of Conflict of Laws
(Restatement). Id. HN3[ ] Nebraska courts generally
give effect to the parties’ choice of law. Vanice v. Oehm,
247 Neb. 298, 526 N.W.2d 648, 651 [*896] (Neb.
1995); Restatement § 187(1). Restatement section
187(1) provides “the law of the state chosen by the
parties to govern their contractual rights and duties will
be applied if the particular issue is one which the parties
could have resolved by an explicit provision in their
agreement directed to that issue.” Restatement §
187(1). Section 187(2) provides the parties’ contractual
choice of law will apply unless (1) “the chosen state has
no substantial relationship to the parties or the
transaction and there is no other reasonable basis for
the parties’ choice,” or (2) “application of the law of the
chosen state would be contrary to a fundamental policy
of a state which has a materially greater interest than
the chosen state in the determination of the particular
issue and which . . . would be the state of the applicable
law in the absence of [**8] an effective choice of law by
the parties.” Restatement § 187(2)(a), (b).

The district court applied Restatement section 187(2)
without analyzing whether section 187(1) or section
187(2) applies in this case. Section 187(2) applies only
when section 187(1) does not govern. See Restatement

§ 187, comment d. Section 187(1) is inapplicable in this
case, because, under Nebraska law, the parties could
not have resolved to apply Ohio law even with an
explicit provision. See CAE Vanguard, Inc. v. Newman,
246 Neb. 334, 518 N.W.2d 652, 656 (Neb. 1994)
(holding “the provision of the agreement which states
that a court may reform the covenant is of no effect.
Private parties may not confer upon the court powers
which it does not possess.”); see also Baxter Intern.,
Inc. v. Morris, 976 F.2d 1189, 1196 (8th Cir. 1992).

The first condition under section 187(2), whether “the
chosen state has no substantial relationship to the
parties or the transaction and there is no other
reasonable basis for the parties’ choice,” is met in this
case. Restatement § 187(2)(a). Nebraska has a
substantial relationship to the parties and the
transaction, because the former [**9] employees and
DCS entered into the Agreements in Nebraska, the
services at issue were to be performed in Nebraska, the
former employees reside in Nebraska, the prohibition of
the noncompete clause directly and materially affects
employment in Nebraska, and DCS does business in
Nebraska. Nebraska clearly possesses a direct and
substantial interest in the employment of its citizens.
The only relationship between Ohio and the parties is
the location of DCS’s corporate headquarters and
principal place of business in Ohio. The Agreements
were not negotiated, entered into, or performed in Ohio.
Under these circumstances, the district court properly
concluded Ohio has no substantial relationship to the
parties or the transaction, and Nebraska has a greater
material interest in the Agreements. See Powell v. Am.
Charter Fed. Sav. & Loan Ass’n, 245 Neb. 551, 514
N.W.2d 326, 332 (Neb. 1994) (deciding the state with
the most significant relationship to the transaction and
the parties is the state where the parties contracted,
negotiated, and resided; where the subject matter was
located; and where performance was to take place).

The second condition also is satisfied. HN4[ ] Under
section [**10] 187(2)(b), application of the chosen law
is precluded if “application of the law of the chosen state
would be contrary to a fundamental policy of a state
which has a materially greater interest than the chosen
state” when the factors articulated in section 188 2 are

2 Section 188 provides in pertinent part:

HN6[ ] (2) In the absence of an effective choice of law
by the parties (see § 187), the contacts to be taken into
account in applying the principles of § 6 to determine the

435 F.3d 892, *895; 2006 U.S. App. LEXIS 1758, **6

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applied. Restatement [*897] § 187(2)(b). HN5[ ]
Nebraska and Ohio courts have materially different
approaches to the reformation of unreasonable
noncompete agreements. In Nebraska, if a court
determines a noncompete agreement is unreasonable,
the court will not reform the noncompete agreement in
order to make it enforceable. H & R Block Tax Servs.,
Inc., v. Circle A Enters., Inc., 269 Neb. 411, 693 N.W.2d
548, 552 (Neb. 2005). Contrary to the Nebraska courts’
approach, Ohio courts are empowered to reform overly
broad or unreasonable noncompete agreements to
make them reasonable. Raimonde v. Van Vlerah, 42
Ohio St. 2d 21, 325 N.E.2d 544, 547 (Ohio 1975). The
district court correctly recognized that because
Nebraska courts expressly have rejected judicial
reformation of noncompete agreements, application of
Ohio law would violate a fundamental policy of
Nebraska law.

[**11] Because Nebraska has a greater material
interest in the Agreements and application of Ohio law
would violate a fundamental policy of Nebraska law, we
hold the district court correctly applied Nebraska law to
the question of the validity and enforceability of the
noncompete agreements. See First Nat’l Bank v.
Daggett, 242 Neb. 734, 497 N.W.2d 358, 363 (Neb.
1993) (disregarding choice-of-law provision because the
chosen state had no contacts with the transaction and
the parties, and application of the chosen state’s law
would offend a strong public policy in the forum state).
See also Rain & Hail Ins. Serv., Inc. v. Casper, 902 F.2d
699, 700-01 (8th Cir. 1990) (applying Nebraska law to
an employment agreement’s noncompete clause
choosing the application of Iowa law, which allowed
modification of overly restrictive noncompete provisions,
and affirming conclusion “Iowa law would be contrary to
a fundamental policy of Nebraska”).

C. Validity of the Noncompete Agreements

law applicable to an issue include:

(a) the place of contracting,

(b) the place of negotiation of the contract,

(d) the location of the subject matter of the contract, and

(e) the domicil, residence, nationality, place of
incorporation and place of business of the parties.

These contacts are to be evaluated according to their
relative importance with respect to the particular issue.

Having concluded Nebraska law applies, we now turn to
whether the noncompete agreements are valid under
Nebraska law. HN7[ ] Pursuant to Nebraska law, a
noncompete agreement is valid if [**12] it is (1) “not
injurious to the public,” (2) “not greater than is
reasonably necessary to protect the employer in some
legitimate interest,” and (3) “not unduly harsh and
oppressive on the employee.” Prof’l Bus. Servs. Co. v.
Rosno, 268 Neb. 99, 680 N.W.2d 176, 184 (Neb. 2004)
(quotation omitted). “An employer has a legitimate
business interest in protection against a former
employee’s competition by improper and unfair means,
but is not entitled to protection against ordinary
competition from a former employee.” Id. at 185. A
noncompete agreement “may be valid only if it restricts
the former employee from working for or soliciting the
former employer’s clients or accounts with whom the
former employee actually did business and has personal
contact.” Polly v. Ray D. Hilderman & Co., 225 Neb.
662, 407 N.W.2d 751, 756 (Neb. 1987).

We conclude the district court properly held the
noncompete agreements were overbroad and
unenforceable. The district court recognized the
noncompete agreements prohibit the former employees
from, directly or indirectly, being concerned in any
manner with any company in competition with DCS, and
from providing [**13] [*898] contract cleaning services
within one hundred miles of any entity or enterprise
“having business dealings” with DCS, including
attorneys, accountants, delivery services and the like.
The breadth of the noncompete agreements effectively
put the former employees out of the cleaning business
within an extensive region. We hold the district court did
not err in concluding Nebraska courts would not enforce
such overly broad noncompete agreements. See
Rosno, 680 N.W.2d at 186-87 (holding noncompete
agreement was overly broad where the agreement
prohibited the former employee from soliciting or
contacting any of the former employer’s clients and
where the former employer could not establish the
former employee had done business with or had
substantial personal contact with all of the former
employer’s clients); Mertz v. Pharmacists Mut. Ins. Co.,
261 Neb. 704, 625 N.W.2d 197, 205 (Neb. 2001)
(holding noncompete agreement was overly broad
where it was not limited to clients with whom the former
employee actually did business or personally
contacted); Moore v. Eggers Consulting Co., Inc., 252
Neb. 396, 562 N.W.2d 534, 540 (Neb. 1997)
(holding [**14] noncompete agreement was overly
broad where it prohibited soliciting or accepting
business opportunities with any client of the former

435 F.3d 892, *896; 2006 U.S. App. LEXIS 1758, **10

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employer with whom the former employee worked or
had knowledge of, and where the agreement contained
an overly broad geographical restriction); Whitten v.
Malcolm, 249 Neb. 48, 541 N.W.2d 45, 48 (Neb. 1995)
(holding noncompete agreement was overly broad
where it prohibited practicing dentistry within geographic
location and was not limited to clients with whom the
former employee did business and had personal contact
and was not even limited to the former employer’s
existing customer base); Vlasin v. Len Johnson & Co.,
Inc., 235 Neb. 450, 455 N.W.2d 772, 776 (Neb. 1990)
(holding noncompete agreement was overly broad
where it prohibited the former employee from entering
into insurance business within fifty miles and was not
limited to the former employer’s clients with whom the
former employee did business and had personal
contact); Polly, 407 N.W.2d at 756 (holding noncompete
agreement was overly broad where it prohibited
soliciting or working for the former employer’s clients
with whom the former employee [**15] did not work and
did not even know).

III. CONCLUSION

Therefore, we affirm the well reasoned judgment of the
district court.

End of Document

435 F.3d 892, *898; 2006 U.S. App. LEXIS 1758, **14

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BHR 3565, Employment Law 1

Course Learning Outcomes for Unit I

Upon completion of this unit, students should be able to:

2. Examine the responsibilities of the parties to an employment contract.
2.1 Compare and contrast positions on noncompete clauses.
2.2 Determine which states’ laws support ethical reasoning in the resolution of a case.
2.3 Discuss the legal implications for employers and employees of requiring employees to sign

noncompete agreements.

Course/Unit
Learning Outcomes

Learning Activity

2
Chapter 1 and 2
Unit I Case Study

2.1
Chapter 1 and 2
Unit I Case Study

2.2
Unit Lesson
Preface
Unit I Case Study

2.3
Chapter 1 and 2
Unit I Case Study

Reading Assignment

Preface: Guide to Briefing Cases, pp. xxiv-xxvi

Chapter 1: First the Forest, Then the Trees: An Overview of Employment and Labor Law

Chapter 2: Employment Contracts and Wrongful Discharge

Additional Reading Assignment:

In order to access the following resource, click the link below.

DCS Sanitation Management v. Castillo, 435 F.3d 892, (8th Cir. 2006). Retrieved from https://advance-lexis-

com.libraryresources.columbiasouthern.edu/api/permalink/d34471c6-4b5b-4640-8dbe-
202b87d433b1/?context=1516831

Unit Lesson

Employer-Employee Relationship

The traditional employer-employee relationship is described as employment-at-will, which simply means that
the relationship exists as long as both the employer and the employee want it to exist. That is, employment-
at-will means that an employee can resign whenever he or she wants to resign for any reason or for no
reason. It is often said that an employee must give notice to an employer before the employee resigns, but
that idea arises out of the employee hoping for a positive reference from the employer not a legal
requirement. Employment-at-will also means that an employer can discharge an employee at any time and for
any reason or for no reason, as long as the discharge does not constitute discrimination under federal or
state law.

UNIT I STUDY GUIDE

An Overview of Employment
and Labor Law

https://advance-lexis-com.libraryresources.columbiasouthern.edu/api/permalink/d34471c6-4b5b-4640-8dbe-202b87d433b1/?context=1516831

BHR 3565, Employment Law 2

UNIT x STUDY GUIDE

Title

This traditional employment relationship is sometimes modified by employment contracts. Employment
contracts are governed by the rules that apply to contracts in general. An employment contract is based on an
agreement between the employer and the employee and states express consideration (i.e., the employee
promises to work for the employer for a specified period, and the employer agrees to pay the employee a
specified amount of compensation). It must be made between parties that have the legal capacity to enter into
a contract and be for a legal purpose. Employees hired with a contract can only be terminated according to
the provisions of the contract. Conversely, employees hired under the at-will doctrine can have their
employment terminated at any time and for any legal reason by either the employer or the employee. As with
any other contract, the breach of an employment contract entitles the non-breaching party to recover
damages that arise because of the breach of the contract.

An employee who is fired in violation of an employment contract can recover any compensation due under the
contract that has not been paid. For an employer, that means an employee who quits in violation of an
employment contract may have to pay the costs of finding, hiring, and training a replacement. They may even
have to pay back some of the compensation that has already been paid to the employee who breached the
employment contract.

Another relatively recent issue that has arisen in the employment relationship is whistleblowing.
Whistleblowing occurs when an employee reports to the employer or to federal authorities the unlawful
actions of other employees. It is easy to see where problems can arise when there is whistleblowing, so there
are several federal laws that are intended to encourage employees to report unlawful activities related to
employment and to protect employees who report unlawful activities, including the following:

 the Whistleblower Protection Act that prohibits employers from retaliating against employees who
report wrongdoing,

 the False Claims Act that encourages employees to report activities that defraud federal or state
governments, and

 the Sarbanes-Oxley Act that encourages employees to report activities that they reasonably believe
violate federal security laws.

Introduction to the Court System

This unit will begin the exploration of employment law. This field has changed over the years, and the
progression of the legality of employer-employee rights is an interesting area to follow. Courts look at
common law and statutory law when deciding these cases. Common law is any court decision that has been
handed down over the years by the courts of record. These decisions may be from state or federal courts.
The decisions may have been appealed to a higher court. On appeal, the decisions may be affirmed or
overturned on the state or federal level. If a higher court has ruled on a case, that decision gives the case
more weight. Different states have different names for courts of record. In New York state, the lowest court of
record is called the supreme court; it is a county court. The cases from this court are appealed to the
appellate division in the department where it will be heard. New York has four appellate departments. A party
may then seek redress to the highest court in New York state, which is the court of appeals. When the highest
court in a state makes a ruling, it becomes the law in that state. When the U.S. Supreme Court or another
federal court makes a ruling, it becomes the law in the United States.

In the federal system, the highest court is the U.S. Supreme Court. The state and federal system have
different jurisdictions to hear cases. The federal courts will not hear cases that are solely within the jurisdiction
of the states and vice versa. Federal courts have jurisdiction if the issues concern constitutional rights and in
cases that involve the federal government.

In the area of employment discrimination, some conduct is illegal under state and federal laws. Both the
states and the federal government have laws that forbid employment discrimination, and such an action could
be brought in either court.

BHR 3565, Employment Law 3

UNIT x STUDY GUIDE
Title

Statutory laws are laws that are passed by state or federal legislative bodies. Courts can rule on statutes to
interpret unclear language or to determine whether the laws are constitutional. Statutes are strictly construed
by the courts. Many sections of employment law are governed by statutes.

Interpretation of Cases

The textbook has many examples of cases that were decided by the courts. It is important to know how to
interpret what the cases mean. The title of a case has the citation below it. The plaintiff is the first name
followed by a “v.” (which means versus or against). The party who has been sued is the defendant, and that
name follows the “v.” in the case name. The citation will give you the history of how the case has proceeded
through the court system. If the citation has the abbreviation for a state, then the case was heard in a state
court. The abbreviations “U.S.” or “Fed.” mean the case has been appealed to a higher court, and this will be
noted in the citation. The decision of a case that has been appealed to a higher court will tell you the judges
that agree with the decision; the judges that do not agree and dissent (they have been outnumbered), and
possibly a concurring judge. If a judge concurs, he or she agrees with the majority but for different reasons.
Usually the concurring judge will write his or her own decision and tell you why he or she has ruled that way
and why he or she came to the same decision but for different reasons.

Generally, when looking at a case, a good mnemonic to use is IRAC (issue, rule, application, and conclusion).
First, identify the issue in the case. What are the parties trying to have decided? The current rules of law or
statutes are then cited. How are the rules of law applied? What conclusion or decision has the court
fashioned? This mnemonic will also guide you in writing papers.

Deciphering the Case Study

The party appealing or the appellant is DCS Sanitation Management, Inc. They were also the plaintiff or the
party that sued the employees for violating a noncompete clause. The defendants or persons who were sued
are Elroy Castillo, Efren George Castillo, and Adolfo Martinez. The case is in federal court. The plaintiff lost in
the lower District Court of Nebraska and is appealing. The federal court applied Nebraska law instead of Ohio
law in this case. The U.S. Supreme Court denied hearing the case (DCS Sanitation Management v. Castillo,
2006). The case involved two different states so the conflict of the two state laws gave the federal courts
jurisdiction.

DCS Sanitation Management, Inc., Appellant, v. Eloy Castillo; Efren George Castillo; Adolfo Martinez,
Appellees.

No. 05-1201

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

435 F.3d 892; 2006 U.S. App. LEXIS 1758; 152 Lab. Cas. (CCH) P60, 135; 23 I.E.R. Cas. (BNA) 1772

October 14, 2005, Submitted

January 25, 2006, Filed

SUBSEQUENT HISTORY: Rehearing denied by, Rehearing, en banc, denied by DCS Sanitation Mgmt. v.
Castillo, 2006 U.S. App. LEXIS 8154 (8th Cir., Apr. 4, 2006)
US Supreme Court certiorari denied by DCS Sanitation Management, Inc. v. Castillo, 2006 U.S. LEXIS 7161
(U.S., Oct. 2, 2006)

PRIOR HISTORY: [**1] Appeal from the United States District Court for the District of Nebraska.

The head notes of the case give a quick overview of the legal issues that are considered in the case. Look at
the headnote below. It is designated as HN4. The number four designates where in the decision this issue is
discussed. This allows you to quickly look at the procedural issues of conflict or choice of law.

Civil Procedure > Federal & State Interrelationships > Choice of Law > General Overview

Under the second part of the test for choice of law cases, application of the chosen law is precluded if
application of the law of the chosen state would be contrary to a fundamental policy of a state that has a

BHR 3565, Employment Law 4

UNIT x STUDY GUIDE
Title

materially greater interest than the chosen state when certain factors are applied (DCS Sanitation
Management v. Castillo, 2006).

Now that you know how to decipher the cases, enjoy reading them, and think about how you can apply these
laws in your workplace!

Reference

DCS Sanitation Management v. Castillo, 435 F.3d 892, (8th Cir. 2006).