Featured Post by Richard A. Kranitz

Richard A. Kranitz, Esq., comments on Manitowoc Company v. Lanning, a recent decision from the Supreme Court of Wisconsin

Veteran business law attorney, Richard A. Kranitz, Esq., comments on Manitowoc Company v. Lanning , a recent decision from the Supreme...

Sunday, January 20, 2019

Richard A. Kranitz, Esq., comments on Manitowoc Company v. Lanning, a recent decision from the Supreme Court of Wisconsin


Richard Kranitz, business coach and lawyer in Grafton, Wisconsin
Veteran business law attorney, Richard A. Kranitz, Esq., comments on Manitowoc Company v. Lanning, a recent decision from the Supreme Court of Wisconsin, addressing the enforceability of non-solicitation of employees provision in an employment agreement

In his newest published article, business lawyer and coach Richard Kranitz reviews the Wisconsin Supreme Court case of Manitowoc Company v. Lanning, which has important implications for employment agreements. The full article is available on the blog of Mr. Kranitz at https://richardkranitzblog.blogspot.com/

The defendant John Lanning worked for the Manitowoc Company (hereinafter “Manitowoc”) for 25 years as a chief engineer of its construction crane division, starting in 1985.  In 2008, Lanning signed an employment agreement with Manitowoc that contained a non-solicitation of employees provision.  The non-solicitation provision prohibits Lanning from “soliciting, inducing, or encouraging any Manitowoc Company employee to terminate his or her employment with Manitowoc Company or to accept employment with a competitor, supplier, or customer of Manitowoc Company” for a period of two years after Lanning’s termination.

Lanning quit his job at Manitowoc on January 6, 2010 and became the director of engineering at SANY America, a competitor of Manitowoc.  Manitowoc claimed that Lanning subsequently violated the non-solicitation provision on numerous occasions.  “For example, Manitowoc Company asserts that Lanning communicated with at least nine Manitowoc Company employees about potential employment opportunities at SANY, took one Manitowoc Company employee out to lunch in connection with SANY recruitment efforts, took another Manitowoc Company employee on a tour of a SANY crane manufacturing plant in China, and participated in a third Manitowoc Company employee's job interview with SANY.”

First, the Wisconsin Supreme Court addressed whether Wisconsin Statute § 103.465, pertaining to restrictive covenants in employment contracts, applies to the non-solicitation provision in Lanning’s employment contract.  The statute provides that “’any covenant’ described in § 103.465 imposing an ‘unreasonable restraint is illegal’ even as to any part of the covenant that would be a reasonable restraint”.  Manitowoc argued that section 103.465 does not apply to the non-solicitation provision because it is not a non-compete provision, rather non-solicitation.  The Court, however, noted that “[t]ime and again, the case law has focused on the effect of the provision of an employment agreement rather than its label to determine whether it constitutes a restraint of trade governed by Wis. Stat. § 103.465”.  Further, “[w]hether a particular agreement constitutes a restraint of trade is based not upon how the agreement is labeled but upon the effect of the agreement on employees and competition”.  Therefore, because ”[t]he effect of Lanning's non-solicitation provision is to prevent Lanning and a Manitowoc Company competitor from competing fully with Manitowoc Company in the labor pool by soliciting Manitowoc Company employees”, the provision did fall under the scope of section 103.465.

The Court then addressed whether the non-solicitation provision met the requirements of the statute.  The Court noted that the provision prohibits Lanning from soliciting any employee of Manitowoc, which numbers over 13,000 worldwide.  “The non-solicitation provision contains no limitations based upon the nature of the employee's position within Manitowoc Company. No limitations are based upon Lanning's personal familiarity with or influence over a particular employee. There is no limit based upon the geographical location in which the employee works.”  The Court noted that while an employer may have a protectable interest in “retaining top-level employees, employees who have special skills or special knowledge important to the employer's business, or employees who have skills that are difficult to replace”, it does not have a protectable interest in retaining all employees.  Therefore, the Court upheld the lower appellate decision striking down the non-solicitation provision as unenforceable.

Mr. Kranitz notes that the case serves as a cautionary tale for practitioners drafting restrictive provisions in employment contracts as well as employers who wish to utilize such provisions.  The case is Manitowoc Company v. Lanning, Case No. 2015AP1530.


About Richard A. Kranitz

Richard Kranitz is an experienced attorney and business consultant in the areas of corporate, securities and tax planning for corporations, partnerships, joint ventures, limited liability companies, multi-unit enterprises, and a variety of different non-profit entities. In addition, he has counseled their owners and executives in compensation planning, estate plans, and asset protection.

References



*** Richard Kranitz (Wisconsin) is an experienced attorney and business consultant in the areas of corporate, securities and tax planning for corporations, partnerships, joint ventures, limited liability companies, multi-unit enterprises, and a variety of different non-profit entities. In addition, he has counseled their owners and executives in compensation planning, estate plans, and asset protection. Attorney profile at: https://solomonlawguild.com/richard-a-kranitz-esq

Thursday, October 25, 2018

Richard A. Kranitz, Esq., veteran business attorney, notes the emergence of sexual misconduct due diligence as a new issue in corporate mergers and acquisitions.


Richard A. Kranitz, Esq., veteran business attorney, notes the emergence of sexual misconduct due diligence as a new issue in corporate mergers and acquisitions.

            
“With the increase of high-profile sexual misconduct cases against high ranking corporate officers, buyers are increasingly turning more attention to social due diligence and including the so called ‘Weinstein Clause’ in their offer terms”, says veteran attorney Richard A. Kranitz.  The Weinstein Clause, a moniker originating from the widely publicized allegations against movie producer Harvey Weinstein, could refer to many different forms of a contractual clause ranging from escrowed funds against potential damaging claims arising after the sale to guarantees that there are no known claims of sexual misconduct against current high-level corporate executives.  The increasing use of the Weinstein clause highlights the concerns that many buyers have of later revealed damaging information.

Such concerns are also increasing buyers’ focus on social due diligence.  No longer looking just at financial information, prospective buyers are digging deeper into a company’s overall health, such as online reputation, social media presence, as well as potential outstanding misconduct claims or liabilities.  Increased emphasis on responding to sexual misconducts against high level corporate executives is a growing trend in the business world.  According to Temin & Co., a consulting group, corporations have drastically shortened the average time between report of alleged misconduct and dismissal from six weeks in mid-2017 to little over two weeks in mid-2018.

Some, however, are skeptical as to the real-life impact of increased efforts to mitigate risk from corporate sexual misconducts.  In an interview with the Washington Post, noted attorney Debra Katz welcomed the focus such efforts put on sexual misconduct, but was unsure whether it would have real life impact.  Ms. Katz noted that high number of sexual misconduct cases go unreported.  

Furthermore, if the misconduct was perpetrated by an executive at the highest level, efforts such as the Weinstein Clause may be unlikely to cause disclosure of information regarding the misconduct.

Even if there are hurdles such as calculations of damages in enforcing such a clause, the attention on the issue of unknown sexual misconduct by the seller in corporate M&A shows the increased significance of such issue.  It will take a multi-dimensional approach, including contractual clauses and deeper due diligence to address the issue of unknown sexual misconduct in corporate acquisitions. 


*** Richard Kranitz (Wisconsin) is an experienced attorney and business consultant in the areas of corporate, securities and tax planning for corporations, partnerships, joint ventures, limited liability companies, multi-unit enterprises, and a variety of different non-profit entities. In addition, he has counseled their owners and executives in compensation planning, estate plans, and asset protection. Attorney profile at: https://solomonlawguild.com/richard-a-kranitz-esq

References







Sunday, October 7, 2018

Richard A. Kranitz, Esq., experienced Business Attorney, stresses the importance of conducting a thorough Due Diligence prior to Business Acquisition.



Richard A. Kranitz, experienced Business Attorney, stresses the importance of conducting a thorough Due Diligence prior to Business Acquisition

            “Conducting a thorough due diligence before business acquisition is critical to a successful and smooth acquisition process”, says veteran attorney Richard A. Kranitz.  Some of the obvious areas of diligence would include existing contracts, payroll history, retirement account liabilities, and overview of assets and liabilities.  While most would-be business owners would understand the need for examining these basic, but critical, information, a more thorough review and analysis may be appropriate in certain circumstances.

            One such example would be acquisition of a business in a different state or even business with an overseas presence.  With exposure to different regulatory requirements in a new jurisdiction, the acquiring business would have to accurately assess its new obligations and exposures.  For example, a company dealing with sensitive consumer data would be subject to varying types of regulatory requirements in whatever state they do business in.  If such a business were to acquire another business in a different state, they would have to conduct a review to ensure that their existing compliance scheme meets the requirements of the new jurisdiction.  Even more complicated, if the acquiring business is new to handling sensitive consumer data, they may have to review the compliance scheme from scratch or build one from the ground up.  

            Overseas acquisition could be even more complex.  For example, the European Union has enacted General Data Protection Regulation (“GDPR”).  GDPR is widely considered one of the most sweeping and expansive data protection laws anywhere in the world.  Any acquisition of business potentially subject to GDPR would require an extensive review of data handling protocol to ensure compliance with the breadth and scope of GDPR.  

            While many acquisition due diligences focus on financial health and potential liability exposure of the acquired business, experienced attorneys will examine all relevant issues, including, but not limited to, regulatory concerns and multi-jurisdictional dimensions.  Thorough due diligence is critical to ensure that all potential issues and pitfalls are examined prior to the deal being completed and that post-acquisition operation is smooth and free of unanticipated surprises.
 


*** Richard Kranitz (Wisconsin) is an experienced attorney and business consultant in the areas of corporate, securities and tax planning for corporations, partnerships, joint ventures, limited liability companies, multi-unit enterprises, and a variety of different non-profit entities. In addition, he has counseled their owners and executives in compensation planning, estate plans, and asset protection. Attorney profile at: https://solomonlawguild.com/richard-a-kranitz-esq

Wisconsin Business Attorney & Coach Richard Kranitz publishes series of business coaching articles



Wisconsin Business Attorney & Coach Richard Kranitz publishes series of business coaching articles

Motivational and instructional articles were developed during Richard Kranitz’ work as business coach for commercial businesses and their managers

Grafton, Wisconsin 2018 – Business attorney and coach Richard A. Kranitz, based in Wisconsin, has published of series of articles that he wrote during his work as business coach, when he coached entrepreneurs and managers how to better run their companies while enjoying the process.

Mr. Kranitz explains that “I have spent years learning and understanding the principles that underlie human behavior, particularly in the business world. Gradually, over time while coaching business managers to improve their performance, I condensed my experience and learning into a series of articles, which I am now making available on my Blog.”

Attorney Richard Kranitz recently launched a blog that provides commentary and analysis of complex Business Law, Securities, and Taxation issues as a service to the public. In that Blog, he is sharing the experience that he has gained in over 45 years of solving complex Business Law problems not only for individuals but also for businesses.

Mr. Kranitz’ Blog features legal analysis and commentary on significant court precedents, as well as regulatory developments.

Mr. Kranitz prides himself in being a counselor and mentor of business owners and managers, to encourage them to make positive and sustainable changes in their operations. He has served many years as an officer and director of firms in many industries, where he has assisted in business and strategic planning and problem solving to support growth with profits.

The series of coaching related articles include (key content in parentheses):

“Take the Key Step in Startup Success” (… Decades ago, most students of entrepreneurship believed that successful entrepreneurs had some rare ability that enabled them to build a rapid growth business - the ability to spot an opportunity that others missed - but in recent years, many who studied successful entrepreneurs have come to the same conclusion that I did from studying my more successful entrepreneur clients. They found an element that I found validated in my own experience in those companies that enjoyed sudden rapid growth. In most of those cases, the entrepreneur or startup team did one unique thing before they prepared their business plan. They performed a thorough feasibility analysis before they committed major funds. …). See https://richardkranitzblog.blogspot.com/2018/09/richard-kranitz-take-key-step-in.html
“How to Develop and Attitude of Abundance” (… But just as people often start from either an optimistic or pessimistic perspective, people can begin with an attitude toward scarcity or abundance. Which attitude a business owner takes along that dimension can significantly affect the likely success or failure of his business.  …). See https://richardkranitzblog.blogspot.com/2018/09/richard-kranitz-how-to-develop-attitude.html
“How Do You Grow Your Business?” (… Planning is an important part of achieving success in any business, but implementing those plans is critical. By meeting with the owner regularly to review progress and make adjustments, the business coach helps provide both motivation and accountability in implementing the plan.  …). See https://richardkranitzblog.blogspot.com/2018/09/richard-kranitz-how-do-you-grow-your.html
People - The Heart of Any Business” (… It proves the point that at the heart of any business are its people. Selecting the right people, placing them in the right spots, and facilitating their working together can build a strong business or turn an average one into a business that is great. Understanding their working styles is a key task in the process. Fortunately, there are some tools that can aid in accomplishing that task. One such tool is called a DISC assessment. Through having a job candidate or current employee fill out a detailed questionnaire it can generate a report that identifies certain key behavioral traits. This information can be used to select key personnel, assemble them into effective teams, and assist them to work together more effectively. ….). See https://richardkranitzblog.blogspot.com/2018/09/richard-kranitz-people-heart-of-any.html

Mr. Kranitz’ practice as a business coach ranges from helping business leaders to resolving daily business issues to challenging them to become the best business leaders possible. He helps them evolve strategic management skills so they lead the business instead of working in the business. He strategizes with his clients to create measurable goals, establish clear plans and deliver consistent follow-through.

The articles are available in full length on the Blog of Mr. Kranitz at https://richardkranitzblog.blogspot.com/
 


*** Richard Kranitz (Wisconsin) is an experienced attorney and business consultant in the areas of corporate, securities and tax planning for corporations, partnerships, joint ventures, limited liability companies, multi-unit enterprises, and a variety of different non-profit entities. In addition, he has counseled their owners and executives in compensation planning, estate plans, and asset protection. Attorney profile at: https://solomonlawguild.com/richard-a-kranitz-esq