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© 2017 Zuckerman Spaeder LLP

Showing 15 posts from November 2012.

Suits by Suits Monthly Roundup – November

In November, Suits by Suits explored a number of developments that are relevant to high-level employees and their companies – including the just-released report on awards made to whistleblowers under Dodd-Frank, a  ruling from the Virginia Supreme Court that managers may be personally liable for the wrongful termination of an employee, a First Circuit decision that Starbucks cannot make its baristas share tips with their supervisors, and the court-approved termination of an employee who mooned his bosses.  We also looked at how exit fees for the Atlantic Coast Conference are like liquidated damages in employment agreements, the dangers of waiving contractual arbitration rights in employment agreements (part 1 and part 2), the possible cost of an affair in the work place,  and blaming “hormones” for poor job performance.

Here is a full roundup of our posts from November:

And don’t forget to read our monthly roundup from September and October.

Legal Lessons From the World of Reality TV: Waiving A Contractual Right To ‎Arbitrate An Employment Dispute (Part 2 Of 2)‎

In our last installment, we described a dispute between CBS, on the one hand, and three former producers of the CBS show Big Brother, on the other, in which the former producers argued that CBS had waived its contractual right to arbitrate by spending months pursuing litigation against the former producers before demanding arbitration.  Because many employment contracts have mandatory arbitration clauses, the possibility of waiver must be on the radar screens of parties to an employment dispute.  We discussed the flipside of this issue, arbitration by estoppel, in July.

The threshold question is whether the party seeking arbitration acted inconsistently with the right to arbitrate. Read More ›

How Is An ACC "Exit Fee" Like Damages for Competing with a Prior Employer?

On November 19, the University of Maryland announced that it is leaving the Atlantic Coast Conference, its home for 60 years, to join the Big Ten Conference.  In weighing its decision, Maryland had to consider one big downside: the $50 million exit fee that ACC presidents voted to adopt in September 2012.  Maryland hasn’t paid up, and the ACC sued it on November 27 in North Carolina state court, seeking to recover all $50 million.

The principal issue in the case will be whether the exit fee is a proper amount of “liquidated damages.”  Read More ›

Legal Lessons from the World of Reality TV: Waiving a Contractual Right to Arbitrate an Employment Dispute (Part 1 of 2)

Big Brother Reality TV is a guilty pleasure for some - not us at Suits by Suits, mind you, as we prefer to focus our attention on the more pressing legal questions of our time.  Reality TV is also a highly competitive industry and fertile ground for lawsuits between companies and star employees with lessons for all of us about employment contracts.  In our last episode, MSNBC and the former host of My Big Obnoxious Fiance taught us about repudiating contracts.  In this episode, CBS and three former producers of Big Brother  teach us about waiving a contractual right to arbitrate an employment dispute.

The three former Big Brother producers - Corie Henson, Kenny Rosen and Michael O’Sullivan – eventually wound up working on the production of ABC’s The Glass House, which CBS has called a blatant rip-off of Big Brother, and which aired last summer.  Before it aired, in May 2012, CBS sued ABC and the three former producers in federal court in Los Angeles.  The former producers had signed non-disclosure agreements (NDAs) with CBS in connection with their work on Big Brother.   CBS sought to temporarily restrain ABC from airing the first episode of The Glass House, claiming that ABC and the former producers had violated CBS’s copyrights and misappropriated its trade secrets in the production of the show.  CBS also claimed that the former producers violated the NDAs by disclosing confidential information and trade secrets relating to technical, behind-the-scenes aspects of filming and producing Big Brother. Read More ›

Over the “Moon”: Court Approves Termination with Cause as Result of Employee’s Display of Derriere

Jason Selch had a way of getting to the bottom of things.

Selch, an investment analyst at Columbia Wanger Asset Management, L.P. (a company under Bank of America’s corporate umbrella), was upset after his employer fired his friend.  He went to find his boss, Charles McQuaid, and located him in a conference room with Columbia’s Chief Operating Officer.  He asked them if he was subject to a non-compete agreement. When the two said no, he “proceeded to unbuckle his pants, pull them down, and ‘moon[ed]’” them.  Selch v. Columbia Management, 2012 IL App (1st) 111434.

Once the mooning was complete, Selch’s bosses didn’t turn the other cheek.  Read More ›

SEC Issues Annual Report on Dodd-Frank Whistleblowing Program: 3,001 Tips, One Award

Cash RewardAs of now, SEC whistleblowers have a one-in-3,001 chance of receiving a whistleblower award.  That’s according to the latest annual report from the SEC’s Office of the Whistleblower, which was established to administer the whistleblower bounty program established by the Dodd-Frank Act of 2010.

We’ve previously covered the only award made to date under the whistleblower program – a $50,000 payout, nearly 30% of what the SEC recovered in that particular case.  But what we didn’t know at the time was how many tips had actually been made to the SEC by potential whistleblowers.  Read More ›

The Inbox, Pre-Turkey Week Edition

Sex – or allegations of sex – and breakfast food seemed to dominate the world of employment disputes involving executives this week. There’s more than one joke there, but at Suits-by-Suits we’re lawyers and not comedians, so we’ll let the news speak for itself: 

  • Waffles:  The CEO of southern food chain Waffle House denied allegations that he forced a former employee to have sex with him, contending instead that her allegations were an attempt at extortion:  “I am a victim of my own stupidity, but I am not going to be a victim of a crime,” Joe W. Rogers Jr. said, according to this article in Salon.  Almost sounds like a tale that could wind up in a twangy song on one of the chain’s signature jukeboxes. 
  • Pancakes:  Twenty-two women who were allegedly sexually harassed by an IHOP manager will divide up $1 million – the amount paid to settle an EEOC case against one of the chain’s franchisees.  The franchising company will also provide better training.   

All we need is some toast and bacon.  But instead we have these two notes, both relating to Morgan Stanley:

  • The Phone Is Not For You: The investment bank is not entitled to a former employee’s iPhone, according to a New York State appellate court.  A lower court ordered William Atha to turn his iPhone over to Morgan Stanley, which sued financial adviser Atha after he left for AllianceBernstein.  But the appellate court agreed with Atha that turning over his phone might violate his privacy rights; it also held the trial court should have given Atha a hearing on the issue. 
  • Reimbursement Please: Morgan Stanley is also in the news for filing suit against Joseph Skowron, a former managing director of FrontPoint (which the bank acquired in 2006).  Morgan wants Skowron to pay it the $33 million that it had to pay the SEC to settle claims Skowron used non-public information to trade stock.  “Doctor-turned-stock-picker Skowron” has already been sentenced to five years in prison and order to pay $5 million.  

And finally two news notes on employment issues that can affect executives and their companies, and that we cover regularly:

  • This Darned Social Media Business: Here’s a Law360 report on a social-media-at-work survey by the Proskauer Rose law firm.  Proskauer concludes “Having a social media policy that explains both acceptable and unacceptable usage puts employees on notice of what they can and can't do, potentially preventing missteps. And it also makes it easier for the employer to show that any disciplinary actions are taken lawfully.”  We would agree – we’ve covered the difficult issues raised by social media here, here, here and here
  • The Price Is…Um, $8 Million: Pregnancy as an employment issue, it seems, is all around – more than stinkbugs in Washington or love for Mary Tyler Moore a/k/a Mary RichardsLaw360 reports that on Wednesday, former “The Price is Right” model Brandi Cochran asked a jury for more than $8 million, claiming the game show’s producers had “a ‘dirty little secret’ of hostility toward pregnant models.” We’ve never seen an amount that high on the great game show’s famous dollar wheel We have, however, written about the issues that pregnancy can raise for executives and companies – and offered some views on how to avoid those issues – here, here, here, and here

First Circuit to Starbucks: No Means No, Tips are for Baristas Only

In an opinion that we have been awaiting, late last week, the U.S. Court of Appeals for the First Circuit affirmed the Massachusetts federal court’s ruling that Starbucks violated the Massachusetts Tip Act by requiring baristas to share with shift supervisors tips left by customers.  The First Circuit agreed with the lower court that Starbucks shift supervisors have some managerial responsibilities and therefore cannot share in the tips.  The Tip Act prohibits employers from requiring “wait staff employees” – who are defined in the Act as having “no managerial responsibility” and whom the parties agreed include Starbucks baristas – from sharing tips with anyone who is not a wait staff employee.   Starbucks argued that its shift supervisors have no managerial responsibility because, just like baristas, they spend the vast majority of their time serving customers.  The First Circuit wasn’t buying it, noting that the Act has a bright-line test for defining wait staff employees, that the “no”  in “no managerial responsibility” means “no,” and that shift supervisors do not pass the test because they are, for example, “charged with opening and closing the store, handling and accounting for cash, and ensuring that baristas take their scheduled breaks.”  The court also said that Starbucks’ internal documents explaining that shift supervisors “‘directly manage’ three to six other employees while on shift” were “potent evidence” against Starbucks.  The First Circuit also left intact the lower court’s certification of a class of Massachusetts baristas and its award of damages to them of over $14 million – which includes $7.5 million in tips that Starbucks allocated to shift supervisors.  We are still on the lookout for how the New York Court of Appeals will rule in a similar case challenging Starbucks’ tip pooling practices under New York Law.  

Tip: Don't Blame A Pregnant Woman's "Hormones" For Job Performance Before Firing Her

Bun in OvenLet’s start this story with a basic truth: it’s generally a bad idea to tell a pregnant woman that her hormones will make her “get emotional” and get “caught up in things” in a way that affects her judgment. 

You need not take this from me as a lawyer-blogger.  Take it from me as a guy whose wife is pregnant with our first child.  Blaming anything in our house on pregnancy hormones is a one-way ticket to the basement couch. 

It’s also a bad idea to say this to a pregnant employee, as department-store chain Target Stores is learning.  We’ve written about the Pregnancy Discrimination Act of 1978 before, and in some high-profile contexts.  But the case of Spigarelli v. Target, which will move forward in federal court in Pennsylvania now that Target has lost its summary judgment motion, shows that this lesson continues to bear discussion.  Read More ›

The Cost of an Affair

Following up on an item from yesterday’s Inbox, Marjorie Censer of the Washington Post reports that incoming Lockheed Martin CEO Christopher E. Kubasik will receive a $3.5 million separation payment after being asked to resign last week following revelations that he had engaged in a “lengthy, close, personal relationship with a subordinate employee.” Read More ›