The Inbox - May 17, 2013

May flowers are blooming, and so is the Suits by Suits news:

• CEO dismissals hit a 10-year high in 2012, according to The Corporate Board’s study of CEO succession practices.  Matteo Tonello of the Corporate Board published this summary of the study on the Harvard Law School Forum on Corporate Governance and Financial Regulation.
• The Anderson County Council is talking settlement in its long-running dispute with former county administrator Joey Preston, reports Bill Poovey of GSA Business.   The South Carolina legislators have spent $3 million in legal fees in their unsuccessful effort to recover Preston’s $1 million severance package.  That money would have bought a lot of Skins’ hot dogs.
• We previously brought you the story of David Nosal, a former Korn/Ferry executive who was facing trial on charges of gaining unauthorized access to Korn/Ferry’s system and stealing trade secrets.  Joanne Lublin of the Wall Street Journal reports that the trial did not turn out well for Nosal: he was convicted on all counts.  Nosal told Lublin that he is confident that the verdict will be reversed.
• New Mexico legislators criticized the large buyout offered to the new head coach at the state university, reported Alex Goldsmith at kqre.com.  Craig Neal will get $1 million plus up to $300,000 if the school decides to fire him in the next four years.  In his defense, Neal could have pointed to Mike Krzyzewski, who received $9.7 million from Duke in 2011 (when, incidentally, the Blue Devils lost to 15-seed Lehigh in the NCAA tournament).
• More sports news: Sean Newell of Deadspin reports that warm and fuzzy coach Bill Belichick and the New England Patriots may have cut a player, Kyle Love, because he was diagnosed with diabetes.  Newell’s post discusses the Americans with Disabilities Act, which could have protected Love from termination based on his condition, and the at-will employment doctrine.

Supreme Court Considering Whether to Accept Sarbanes-Oxley Whistleblower Case

Only a handful of employment cases make it all the way to the Supreme Court’s august chambers at One First Street.  That’s largely because the Court has discretion whether or not to review cases decided by lower courts of appeals.  Thousands of unhappy litigants file petitions for writ of certiorari every year, asking for review from the highest court in the land.  Almost all are turned away.

Tomorrow, the Court will consider whether to accept an appeal by Jonathan Zang and Jackie Lawson in a case that has significant implications for the Sarbanes-Oxley whistleblower protection provision, 18 U.S.C. § 1514A.  Section 1514A, which was passed as a response to the Enron and other financial scandals of the early 2000s, prohibits public companies, as well as “any other officer, employee, contractor, subcontractor, or agent of such company,” from retaliating against “an employee” for protected activity.  The issue in Zang and Lawson’s case is whether Section 1514A protects employees of privately-held companies, if those companies are working as contractors for public companies. Read More ›

Farmers Insurance Wins Summary Judgment on Ex-Employee’s Breach of Contract

As we’ve covered before on Suits by Suits, summary judgment can be a powerful weapon for a party to a civil lawsuit.  By granting summary judgment, a court can resolve a claim before trial, meaning that it’s never heard by a jury.  The standard for granting summary judgment, found in Rule 56 of the Federal Rules of Civil Procedure, is well-known to civil litigators: it is appropriate when there are no genuine issues of material fact and the case can be decided as a matter of law. 

In a recent case from the District of Minnesota, Farmers Ins. Exchange v. West, the Farmers Insurance Group used summary judgment effectively on both offense and defense.  First, it won a ruling that its former district manager, Theodore West, breached his appointment agreement and that Farmers suffered damages as a result.  Then, on defense, it knocked out West’s counterclaims for breach of contract and discrimination.

So what happened in West’s case, and why did Farmers prevail? Read More ›

The Inbox - May 10, 2013

This week in Suits by Suits:

• Credit Suisse Group AG sued its former Vice President of Emerging Markets, Agostina Pechi, seeking a temporary restraining order barring Ms. Pechi from soliciting Credit Suisse clients.  According to the complaint, Ms. Pechi -- now employed by Credit Suisse's competitor, Goldman Sachs -- engaged in "an after-hours document raid" of confidential information from Credit Suisse which she allegedly emailed to her personal account before leaving the firm.  One interesting wrinkle here is that Ms. Pechi had an arbitration clause in her employment agreement requiring arbitration of all employment-related grievances, but Credit Suisse filed suit, claiming that "a court order was needed to prevent [it] from being harmed in the interim."  We've previously suggested that mandatory arbitration clauses may not always be a benefit to employers; and, if you're curious as to whether Credit Suisse's filing could be construed as a waiver of its right to arbitrate, you might want to check out our two-part series on waiver here (Part 1) and here (Part 2).
• We've previously analyzed the "say-on-pay" provisions of Dodd-Frank (and see also our this Inbox item); now we have a new wrinkle.  A few days ago, Heinz's shareholders passed a nonbinding vote to deny outgoing CEO Bill Johnson a $56 million golden parachute that includes accelerated stock options.  Advisors say that the vote "doesn't hold up the deal [to take Heinz private]" which we interpret to mean that Johnson will get his money.
• Residential Capital, LLC -- a bankrupt mortgage company owned by Ally Financial, Inc., which is in turn majority-owned by the U.S. Government -- has requested approval from a New York Bankruptcy judge to pay $7.8 million in severance pay to outgoing executives, with payments capped at $136,000 for two senior execs.  The motion notes that the employees would have been "entitled to sums well in excess of the $136,000 cap" had they remained with the company.
• A case study in why clawbacks are hard:  Anderson County, South Carolina is deciding whether to continue to pursue litigation to force its former county administrator, Joey Preston, to repay a $1.1 million severance package he received in 2008 in light of allegations of ethical violations, fraud, and breach of fiduciary duties.  However, a state court found in Preston's favor on Thursday and required the county to pay Preston $700,000 in attorneys' fees.  Anderson County now estimates that it has spent $3 million trying to recover the $1.1 million from Preston.
• Finally, Bloomberg BNA has posted a nice summary article analyzing the Supreme Court's April 24, 2013 decision in University of Texas Southwestern Medical Center v. Nassar, which addresses various evidentiary issues in the context of an employee's Title VII retaliation claim. 

Martensen v. Koch, Venue, and You

Yesterday we looked at a California federal court decision in Martensen v. Koch, in which ex-Oxbow executive Kirby Martensen has sued billionaire William Koch, alleging kidnapping, false imprisonment, conspiracy, and other claims related to his alleged treatment at the hands of Oxbow employees at the Bear Ranch in Colorado.  Specifically, we looked at what the decision means in terms of whether a court can maintain personal jurisdiction over an out-of-state defendant; in the Martensen case, the clear take-away is that committing any portion of an alleged wrong within a state counts as having committed the wrong within that jurisdiction.  So even though most of Kirby Martensen’s kidnapping and false imprisonment allegations relate to conduct that took place in Colorado, because he was allegedly placed on a private plane owned by Oxbow and flown to Oakland, California before being released, the court found that (for purposes of personal jurisdiction) Martensen’s alleged false imprisonment “that began on [Koch]’s private ranch by [Koch]’s agents [in Colorado] continued unbroken until [Martensen]’s release in Oakland, California,” and thus gave rise to personal jurisdiction over Koch in California.

Personal jurisdiction, however, is only the first step in the process of figuring out where you can and should be sued.  Personal jurisdiction determines whether a court has any power over you at all, and is based on the principle – expressed in depth in yesterday’s post – that if you have never set foot in the state of Wyoming, you cannot be compelled to appear in Court in Wyoming.(*)  But just because a state has personal jurisdiction over you doesn’t mean that state is the best place to handle a dispute.  This is the question of venue.  Read on. Read More ›

Martensen v. Koch, Personal Jurisdiction, and You

As you probably know, we here at Suits by Suits have been fascinated by the strange case of Kirby Martensen, the former Oxbow Group executive who alleged that he was kidnapped and falsely imprisoned by billionaire William Koch.  We teased for you last week that Koch’s motion to dismiss, to strike, and in the alternative to transfer venue of the case from California to Colorado was denied, and the case will proceed.

Now, we’ve gotten our hands on the judge’s decision and had a chance to review it in depth; particularly if you’re a civ pro geek like me, it’s worth a read.  Even if you’re not, the decision helps any potential litigant -- and really, isn’t that all of us? -- understand where we can expect to sue or be sued.  Read on.... Read More ›

The Inbox, May Day Edition

As a blog focused on employment issues, we’d be remiss if we didn’t at least note that the week that’s ending included May Day, which has long been known as International Workers’ Day.  Although this day’s somewhat curious history includes support from Marxists, Socialists, and the Catholic Church, it really got its start after a bloody bombing and riot in Chicago’s Haymarket Square.  

Fortunately for us at Suits-by-Suits, the employment disputes we deal with most – mainly executives and the companies that employ them – don’t lead to bloody confrontation, only (sometimes) litigation.  Though even litigation sometimes has its moments. 

Anyway, here’s what has come over that transom that has piqued our interest:  Read More ›

Don’t Mess With The Lawyers (Or Other Public Employees), Part 2‎

In the first part of this series, we raised the question of whether a public employee’s rights under the First Amendment to the Constitution – primarily the right to speak freely on public issues – is limited by the fact that she works for the government.  It’s the curious mix of the Constitutional rights we all enjoy, and the duty of the government to act as an employer when it hires and manages people to get things done.  We looked briefly at how the Supreme Court addressed this issue: in short summary, public employees keep their rights to free speech on issues of public concern – but when they are speaking as part of their official duties, or their speech creates a disruptive atmosphere for the government agency, the employee can be fired for speaking out. 

Two recent cases dealing with deputy attorneys-general illustrate this difficult intersection between public employment and speech.  In both cases, the attorneys – a breed not known for silence – lost their jobs for speech: one for speaking out, and the other for refusing to speak when she was told to do so.  Let’s see how their cases against their public employers are faring.  Read More ›

Rule #1: Don’t Mess With The Lawyers (Or Any Other Public-Sector Employees), Part 1

Some days when I look over the possible stories here, they’re filled with disputes between attorneys.  It almost makes me think that my fellow editors at Suits-by-Suits and me are the only attorneys that can get along.  Most of the time, at least. 

Because if you are, or have ever dealt with, Attornicus Americanus, then you know two things about our profession: 1) we don’t like to be told to be quiet when we have something important to say; and 2) even worse, though, is telling us we have to say something that we don’t want to say.  The two cases at issue in this two-part series feature lawyers working for the government who were in just those situations, and were fired.  We look at recent interesting developments in their claims for retaliation.  In passing, too, we’ll note what one of these lawyers was fired for saying, and what the other lawyer was fired for refusing to say. 

All in all, these are posts about whistleblowing and retaliation claims by public employees – and not just attorneys, either.  The public nature of the employment here is important because government employees keep some of their First Amendment rights to free speech when they go to work for the government.  The government employer, for its part, has some limited right to limit its employees’ speech in order to get its mission accomplished.  So before we turn to the two cases, a brief tour through the First Amendment rights of public employees is in order.  Read More ›

April 2013 Monthly Roundup

April showers bring May flowers, which, as the old joke goes, usually bring these. At ‎Suits by Suits, however, April brought a mix of interesting stories involving non-‎compete agreements, the mechanics of employment contracts, and all sorts of other ‎topics:‎

• Third Circuit Rejects Narrow Construction of Sarbanes-Oxley Whistleblower Claim
  Jason M. Knott | April 30, 2013
• Recent Breach of Contract Lawsuit Against Michael Keaton Illustrates Measuring Expectation Damages
  Ellen D. Marcus | April 24, 2013
• Why Didn't Rutgers Fire Basketball Coach Mike Rice for Cause?
  Ellen D. Marcus | April 23, 2013
• “You’ve Got…a  Non-Compete!”
  William A. Schreiner, Jr. | April 17, 2013
• Criminal Trial Begins in Case Against Former Executive Search Head
  Jason M. Knott | April 15, 2013
• California Continues to Go After Non-Competes
  P. Andrew Torrez | April 11, 2013
• California Strikes Down An Employee’s Agreement to Arbitrate on Substantive ‎Unconscionability Grounds (As “One-Sided”)‎
  P. Andrew Torrez | April 8, 2013
• Employment Agreement Tip of the Week No. 2: Once You Get It in Writing, Put Out Future Fires by Making Sure the Writing Is Clear
  William A. Schreiner, Jr. | April 5, 2013
• Employment Agreement Tip of the Week No. 1: Get It in Writing
  William A. Schreiner, Jr. | April 3, 2013