Your Daily Three: May 13
May 13, 2020
Thank you for your continued readership. Let us know if there are any topics you’d like to see covered in an upcoming issue.
1. Read the updated Guidance on PPP Economic Necessity Certification. The SBA issued new FAQ#46 this morning, which clarified that PPP loans under $2 million will automatically be deemed to meet the economic necessity certification. For loans over $2 million, if during the course of the SBAs audit of that loan they determine that a borrower does not have an adequate basis for the economic necessity certification, if the borrower repays the loan, the SBA will not pursue administrative enforcement with respect to the economic necessity certification. Read here for a full reproduced text of FAQ#46 (emphasis added), and view the FAQ page here. Answered by Aria D. Eckersley
2. "Given current economic circumstances, a few of our employees have resigned. My question is if an employee leaves and violates any agreements (by wrongfully competing, soliciting customers, etc.), can we do anything to stop this employee even though courts are closed?" Answered by Christina E. Lutz
Generally, if a former employee is in the process of violating a restrictive covenant, you can go into court and ask for the entry of a temporary restraining order (TRO) to stop the employee from continuing to violate her agreements. It’s a little more difficult to do that now. While courts are still open to hear “emergency matters” by video conference or telephone conference (and this includes requests for emergency temporary restraining orders), the bar to getting into court and having a hearing is understandably higher. The judges are going to want to make sure that a real emergency exists.
If your case involves a defendant in a different state, and more than $75,000 in controversy, or the theft of trade secrets, you may have a more efficient path to obtaining a TRO because you can bring your claim in federal courts. The federal court system has been operating with electronic filings and telephonic hearings far longer than Cook County state court and has consequently transitioned more seamlessly to the current remote environment. It is also still handling a large volume of criminal cases, and so although non-emergency civil cases are being continued in federal court, things are operating fairly normally, otherwise. Cook County is another story. While you are theoretically able to obtain emergency relief in Cook County, TROs were never easy to get in the first place, and logistically, it may be more difficult now. The hurdles depend on a variety of administrative factors, including which judge you are assigned to and the staff’s technological capabilities. We are leveraging our long-standing relationships in state court to ensure clients get the relief they need and advocating alternative methods for resolving these disputes when it is in the best interests of our clients.
Lastly, even if the remedy of obtaining an emergency temporary restraining order is not realistically available, just the filing of a lawsuit against the employee and its new employer can often accomplish the same result.
3. In our continued commitment to answering your most pressing questions, we will be hosting a series of roundtables tailored to our audiences and the most informative topics. We invite you to join us next Thursday, May 21st at 10 AM CST for our “Ask a Litigator” session. You will have the opportunity to ask questions directly to our LP team of litigators and hear from other participants. Please email RSVP@lplegal.com to reserve a spot and for registration details.
For more resources and LP's response to COVID-19, visit this webpage.