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On March 13, 2024, Governor Inslee, signed a bill modifying Washington's statute governing Noncompeition covenants and nonsolicitation agreements. What follows is a copy of the modified legislation. Download a copy here. I will have more to say on this statutory update in the comping days.     One defense to the enforcement of a contract, or parts of a contract, is that the contract is unconscionable.
Rosskamm v. Amazon.com, C22-1553JLR (W.D. Wash. Jan 24, 2024). In Tadych v. Noble Ridge Construction, Inc., 529 P.3d 199 (2022), the Washington State Supreme Court reviewed a contract dispute that arose out of a contract that reduced the statutory 6-year statute of limitations to 1-year. Here is how our State's High Court analyzed these facts under a contractual unconsionability lens: ¶18 Here, the Tadychs are laypersons, and Noble Ridge drafted the contract, including the one-year limitation provision. No indication exists that this one-sentence provision was bargained for, negotiated, or any separate consideration paid. The limitation provision was included within one of three paragraphs on warranties, 10 pages into a 14-page contract. The waiver is in no sense prominent and has little, if anything, to do with a warranty. It operates as the opposite of what would be considered a warranty. Tadych v. Noble Ridge Construction, Inc., 529 P.3d 199 (2022).
The five elements of a private Consumer Protection Act action include:
(1) an unfair or deceptive act or practice; (2) in the conduct of trade or commerce; (3) which impacts the public interest; (4) injury to the plaintiffs in their business or property; and (5) a causal link between the unfair or deceptive act and the injury suffered. In a consumer transaction the following inquiries are relevant to establish public interest: (1) Were the alleged acts committed in the course of defendant's business? (2) Are the acts part of a pattern or generalized course of conduct? (3) Were repeated acts committed prior to the act involving plaintiff? (4) Is there a real and substantial potential for repetition of defendant's conduct after the act involving plaintiff? (5) If the act complained of involved a single transaction, were many consumers affected or likely to be affected by it? No one of these five factors is dispositive, nor is it necessary that all be present. There is a six year statute of limitations on claims to recover a debt under a written contract such as a promissory note. Failure to file suit to collect the debt by this deadline results in the claim being time barred. However, in some cases, this can be extended if the debtor acknowledges in writing the debt is owed before the six year statute of limitations has expired. The following quote from a 2001 case explains how this works: The Wengers next contend that their letters requesting an itemized bill are too vague and therefore not effective in tolling the statute of limitations. When a writing is made before the limitations period has expired, any acknowledgment of the obligation necessarily implies an agreement to pay, unless something in the acknowledgment requires a contrary conclusion. An effective acknowledgement must either expressly promise to pay or acknowledge that the obligation exists. Either is sufficient, but it need not contain both. If the writing contains the latter, it must express a clear admission of the debt. Moreover, it must be communicated to the creditor and not indicate an intention not to pay. Fetty v. Wegner, 110 Wash. App. 598, 36 P.3d 598 (2001) (footnotes omitted; quotation marks added).
Beginning on January 1, 2024, many companies in the United States will have to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company. They will have to report the information to the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury.
Who Has to Report? Companies required to report are called reporting companies. Reporting companies may have to obtain information from their beneficial owners and report that information to FinCEN. Your company may be a reporting company and need to report information about its beneficial owners if your company is:
Who Does Not Have to Report? Twenty-three types of entities are exempt from the beneficial ownership information reporting requirements. These entities include publicly traded companies, nonprofits, and certain large operating companies. FinCEN’s Small Entity Compliance Guide includes checklists for each of the 23 exemptions that may help determine whether your company qualifies for an exemption. Please review Chapter 2.1 of the Guide for more information. How to Report? Reporting companies will have to report beneficial ownership information electronically through FinCEN’s website: www.fincen.gov/boi The system will provide the filer with a confirmation of receipt once a completed report is filed with FinCEN. When to Report? Reports will be accepted starting on January 1, 2024.
Source: www.fincen.gov The “litigation privilege” is a judicially created privilege that protects participants—including attorneys, parties, and witnesses—in a judicial proceeding against civil liability for statements they make in the course of that proceeding. See, e.g., Mason v. Mason, 19 Wn. App. 2d 803, 830-31, 497 P.3d 431 (2021) review denied, 199 Wn.2d 1005 (2022); Deatherage v. Examining Bd. of Psychology, 134 Wn.2d 131, 135-36, 948 P.2d 828 (1997). As applied to witnesses, the privilege is sometimes referred to as witness immunity, and under it, “[a]s a general rule, witnesses in judicial proceedings are absolutely immune from suit based on their testimony.” Bruce v. Byrne-Stevens & Assocs. Eng’rs, Inc., 113 Wn.2d 123, 125, 776 P.2d 666 (1989).
Statements “are absolutely privileged if they are pertinent or material to the redress or relief sought, whether or not the statements are legally sufficient to obtain that relief.” McNeal v. Allen, 95 Wn.2d 265, 267, 621 P.2d 1285 (1980). But statements having “ ‘no connection whatever’ ” with the litigation are not privileged. Demopolis v. Peoples Nat. Bank of Wash., 59 Wn. App. 105, 110, 796 P.2d 426 (1990) (quoting RESTATEMENT (SECOND) OF TORTS, § 586, comment c (AM. LAW INST. (1977))). Thus, not every passing statement made in court avoids liability. But the determination of pertinency is not a high bar. As the Restatement (Second) of Torts indicates, a statement “need not be strictly relevant to any issue” so long as it bears “some reference to the subject matter of the . . . litigation.” RESTATEMENT § 586, comment c. Litigation privilege therefore prohibits liability stemming from statements (1) made in the course of a judicial proceeding (2) that are pertinent to the litigation. Pertinency is a question of law reviewed de novo. Demopolis, 59 Wn. App. at 110. The purpose of the litigation privilege doctrine is to encourage frank, open, untimorous argument and testimony and to discourage retaliatory, derivative lawsuits. As applied to attorneys, it furthers “ ‘a public policy of securing to [counsel] as officers of the court the utmost freedom in their efforts to secure justice for their clients.’ ” Mason, 19 Wn. App. 2d at 831 (quoting McNeal, 95 Wn.2d at 267). As applied to witness testimony, it preserves “the integrity of the judicial process by encouraging full and frank testimony.” Bruce, 113 Wn.2d at 126. The rule addresses the concern that a witness may either be reluctant to come forward to testify in the first place or shade their testimony “to magnify uncertainties, and thus to deprive the finder of fact of candid, objective, and undistorted evidence.” Briscoe v. LaHue, 460 U.S. 325, 333, 103 S. Ct. 1108, 75 L. Ed. 2d 96 (1983). Source: Young v. Rayan et al., Washington Court of Appeals, Div. 1, (No. 84426-1-I (06/26/2023). On June 14, 2021, Seattle City Council passed SMC 14.34, the Independent Contractor Protections (ICP) Ordinance. This ordinance requires covered hiring entities to provide independent contractors with disclosures prior to entering a contract and at the time of payment. In addition, hiring entities must provide timely payment under the terms of a contract, the terms of the pre-contract disclosure, or within 30 days of contract performance. The ordinance goes into effect on September 1, 2022.
The ordinance requires commercial hiring entities to provide self-employed independent contractors with:
Who is Covered? Self-employed independent contractors who:
Source: City of Seattle Office of Labor Standards Washington businesses and individuals who hire employees and independent contractors should be aware of the following notable change to Washington law and take the following recommended actions. See RCW 49.44.211.
Effective June 9, 2022, employers may not include a provision in any contract with an employee or independent contractor that prohibits the employee or independent contractor from disclosing or discussing conduct, or the existence of any settlement involving conduct, that the employee or independent contractor reasonably believed under Washington state, federal, or common law to be illegal discrimination, illegal harassment, illegal retaliation, a wage and hour violation, or sexual assault, or that is recognized as against a clear mandate of public policy. Prohibited non-disclosure and non-disparagement provisions include those contained in employment agreements, independent contractor agreements, agreements to pay compensation in exchange for the release of a legal claim, or any other agreement between an employer and an employee. It is a violation of the new law for an employer to seek to enforce such a provision, for an employer to request or require an employee enter into such a provision, and for an employer to discharge, discriminate, or retaliate against an employee for disclosing or discussing conduct that the employee reasonably believes to be illegal conduct. An employer who violates this section after June 9, 2022, can be held liable in a civil cause of action for actual or statutory damages of $10,000, whichever is more, as well as reasonable attorneys' fees and costs. Action Items: Update Employee Handbooks ASAP and issue notice to independent contractors with this or similar language: "The Company does not restrict or prohibit employees or independent contractors from disclosing or discussing conduct, or the existence of any settlement involving conduct, that the employee or independent contractor reasonably believes under Washington state, federal, or common law to be illegal discrimination, illegal harassment, illegal retaliation, a wage and hour violation, or sexual assault, or that is recognized as against a clear mandate of public policy. This includes such conduct that occurs at the workplace, at work-related events coordinated by or through Company, between employees, or between Company and an employee, whether on or off the employment premises." Action Item: Update templates for Offer Letters, Employment Agreements, Non-Disclosure Agreements, Independent Contractor Agreements, Employee Separation and Release Agreements, and Employee Resignation Agreements to ensure compliance. Contact Mark D. Walters Article I, Section 8:
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