Busting the Home-State Advantage Regarding Wrongful Workplace Acts

By Daniel Saeedi, Rachel L. Schaller

Feb. 5, 2019

Three Rivers Provider Network Inc. is a medical billing company headquartered in Nevada.

It employed three high-ranking individuals, gave them access to its intellectual property and had them sign confidentiality agreements. All three employees did not live in Nevada. The employees allegedly left Three Rivers and started a competing business in California, Medical Cost Containment Professionals LLC, using Three Rivers’ confidential information and business models and breaching their confidentiality agreements with Three Rivers.

Three Rivers filed a complaint for breach of contract in Nevada against Medical Cost. The employees filed a motion to dismiss the complaint for lack of personal jurisdiction, alleging that they did not have sufficient minimum contacts with Nevada to be sued there.

The court agreed. None of the former employees resided in Nevada, and the competing company, Medical Cost, was not incorporated in Nevada. The court rejected Three Rivers’ argument that the former employees knew they were hurting a Nevada employer.

Such an argument, according to the court, was not enough to allow the non-Nevada employees to be sued there. Three Rivers Provider Network Inc. v. Medical Cost Containment Professionals LLC, No. 2:18-CV-135-JCM (GWF), 2018 WL 3620491 (D. Nev. July 30, 2018).

IMPACT: Following the U.S. Supreme Court’s 2014 decision in Walden v. Fiore, courts around the country are dismissing cases where the employer attempts to sue a former employee for wrongful acts committed outside of the employer’s home state. These cases depend on their unique facts; courts look at the various contacts that the employee (and any potential new employer) have with the state where a lawsuit is filed.

Also in Legal: Supervisor’s Unchecked Sexual Harassment 

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