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- Seeking Coverage Under Your D&O Insurance Policy: What Is A Claim And When Was It Made?
- The Inbox – The “Pao Effect”
- The Fashionable and the Furious: Dov Charney Seeks $40 Million from American Apparel
- Whose Idea Is It? Make Sure Employees Clearly Transfer Ownership Of The Intellectual Property To The Organization Before Parting Ways
- Transition Is Such A Difficult Thing: Crystal Cathedral’s Battle With Its Founder
- The Inbox – An Officer and a Whistleblower
- Pao v. Kleiner Perkins: Some Lessons for Employers Thus Far
- Should Executives Arbitrate? The Empiricists Weigh In
- Former LSU Assistant Coach Sues School to Avoid $400,000 Buyout
- The Inbox – This One’s for the Birds
- "Key Man" Provisions
- After-Acquired Evidence
- Age Discrimination
- Arbitration and ADR
- Breach of Contract
- Campaign Finance
- Change-in-Control Provisions
- Civil Litigation
- Data Security
- Dodd-Frank Act
- Equal Pay
- Executive Compensation
- Family Medical Leave
- Fiduciary Duties
- Fifth Amendment
- First Amendment
- Government Employers and Employees
- Intellectual Property
- Monthly Roundup
- Motions to Dismiss
- Noncompete Agreements
- Pregnancy Discrimination
- Preliminary Injunction
- Religious Discrimination
- Sarbanes-Oxley Act
- Section 1983
- Severance Agreements
- Social Media
- Statutes of limitations
- Summary Judgment
- Termination With or Without Cause
- The Basics
- The Inbox
- Title VII
- Trade Secrets
- Vicarious Liability
- Wage and Hour
- White Collar Crime
- Workplace Conditions (Occupational Safety and Health)
- Wrongful Termination
Blogs We Like:
The AmLaw Daily
The BLT: The Blog of LegalTimes
Connecticut Employment Law Blog
The D&O Diary
Delaware Employment Law Blog
DeNovo: A Virginia Appellate Law Blog
The Employer Handbook
Executive Pay Matters
The Federal Criminal Appeals Blog
Grand Jury Target
Screw You Guys, I’m Going Home: What You Need To Know Before You Scream “I Quit,” Get Fired, Or Decide to Sue the Bastards
Trade Secrets & Noncompete Blog
Virginia Appellate News & Analysis
WSJ Law Blog
Showing 15 posts from February 2013.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) required every public company to disclose its incentive-based compensation and to adopt a policy to recover from current and former executives, in the event of a restatement, any such compensation that would not have been awarded under the restated financial statements. As a result of the Act, many public companies in America have adopted new compensation “clawback” policies, even though the SEC has yet to promulgate regulations as required by the statute and there is no effective date for implementing these requirements. Read More ›
Why the Color of Your Parachute May Be Gold - Change-in-Control Severance Agreements for C-Suite Employees
On Friday, we reported on American Airline CEO Tom Horton’s golden parachute in the merger agreement between American and US Airways. American is asking the court overseeing its bankruptcy to approve the merger agreement, which includes a letter agreement between American and Horton. The letter agreement provides that Horton’s employment with American will be terminated at the time of the merger, and – so long as he agrees to release American and US Airways from any claims – he will be paid severance totaling nearly $20 million in cash and stock.
Why would any company agree to such a thing? According to American, its agreement with Horton is “in recognition of [his] efforts in leading [American’s] restructuring and his role in enhancing the value of [American] and overseeing the evaluation and assessment of potential strategic alternatives that culminated in the Merger.” In other words, to compensate him for helping to make possible a good merger and then getting out of the way. The new company created by the merger can only have one CEO, and it is best for the new company not to be distracted by disputes with former executives of the old company. Read More ›
We’re not sequestering this week’s Suits by Suits news:
- Novartis announced that it would rescind its agreement to pay its former chairman, Daniel Vasella, $78 million to keep him from working for competitors and sharing his experience with them. According to the New York Times, the proposed payment sparked outrage in Novartis’s home country, Switzerland. Vasella released a statement that was significantly more even-keeled than anything I would have written after losing $78 million.
- In other departure news, American Airlines CEO Tom Horton will get a $20 million severance payment when his company’s merger with US Airways is finalized, reported the Dallas Morning News. Plus he gets lifetime flight benefits, although the agreement doesn’t appear to prohibit the company from putting him in a middle seat in the back of the plane.
As we’ve previously discussed in a number of posts, the Dodd-Frank Act of 2010 created a bounty program to reward whistleblowers who report useful information to the Securities & Exchange Commission (SEC), and also instituted new legal protections for whistleblowers. The SEC’s Inspector General recently took a hard look at the SEC’s implementation of these reforms, and reported his conclusions in a 43-page audit report.
So how’s the SEC doing? Read More ›
Recently, however, the show featured an issue that is near and dear to the hearts of those of us who focus on executive-employer disputes: non-compete agreements. The episode in question involved a plotline in which the lead characters were planning to buy their own hospital. They concluded that they couldn’t tell one of their colleagues about the plan, because he had a non-compete/non-disclosure agreement with a competing buyer, and he could end up in jail if he breached that agreement. Did the show get this right? Read More ›
In Part 1 of this series, we relayed the case of Pamela Hill, an engineer with the Virginia Department of Transportation. Hill was passed over for promotion. Another applicant, a man, who has less experience than Hill and doesn’t have a college degree like she has, got the job. VDOT’s only reason for the decision is that the man did better in the interview.
Hill sued VDOT, alleging sexual discrimination in violation of Title VII of the Civil Rights Act. VDOT moved for summary judgment – an early resolution in its favor – and at the end of this post, I’ll tell you if Hill won or not. Read More ›
This week in suits by suits:
- St. Louis-based Reliance Bank founder Jerry Von Rohr sued the bank for more than $400,000 in back pay and benefits, seeking a declaratory judgment that the bank is not prohibited from paying his severance package under the federal government's Troubled Asset Relief Program (TARP), which otherwise limits payments of so-called "golden parachutes."
- Maximillian Coreth, former managing director for Lehman Brothers, appealed a bankruptcy court's dismissal of his $19.6 million breach of contract lawsuit against Barlcays Capital Inc. to the U.S. Court of Appeals for the 2nd Circuit. Coreth is arguing that Barclays assumed the obligations under his employment contract with Lehman Brothers when Barclays purchased Lehman Brothers in September of 2008. Barclays successfully argued to the bankruptcy court and the U.S. district court that its Asset Purchase Agreement did not grant third-party beneficiaries any rights. We'll discuss this case (and these important issues) in depth in the coming days.
- A federal district court judge split the baby in a lawsuit brought by former Detective William Hawkins against the Washington, D.C. Metropolitan Police Department, upholding the Department's general policy regarding its employees' disclosures of information to the media under the First Amendment, but found that the policy was unconstitutional as applied to Hawkins when he was disciplined for speaking to the Washington Post in 2009.
- A Texas state appellate court held that the architectural firm Nortex Foundation Designs, Inc. of Fort Worth, Texas wrongfully terminated a draftsman, Adam Young, who objected to copying designs that he felt infringed upon others' copyrights, holding that Young could not be fired for refusing to follow orders for which he had a "good faith belief" to be criminal.
- In a pair of excellent articles we think will be of interest to many of our readers, the Harvard Law School Forum on Corporate Governance and Financial Regulation (1) tackled the critical question: "How Costly Is Corporate Bankruptcy for Top Executives?" and (2) hosted a survey piece by Richard J. Sandler, a partner at Davis Polk, entitled "Recent Developments in Executive Compensation Litigation." Both are well worth a read.
- A former schoolteacher, Teresa Kemmer, has sued the Cumberland, Tennessee County Board of Education in federal court, alleging sexual harassment and retaliation pursuant to Title VII of the Civil Rights Act of 1964. Ms. Kemmer's complaint alleges, among other things, that after she reported the alleged harassment to her supervisor, she requested to transfer schools but was told "that if she wanted a job she needed to stay where she was."
- Finally, here's one that's just bizarre. In October of 2012, Oxbow Carbon executive Kirby Martensen filed a federal lawsuit against his former employer billionaire William Koch; he's supposedly the "quiet" one, unlike his more high-profile brothers Charles and David (although William donated $2 million to a Republican Presidential candidate Mitt Romney's "Restore Our Future" SuperPAC in 2012). Martensen's lawsuit alleges that Koch kidnapped him, imprisoned him at Bear Ranch in Aspen, Colorado, and interrogated him in the company of a Gunnison County deputy allegedly on hand to "make sure he didn't run away." Koch is back in the news after having filed a motion to dismiss in mid-January of this year; Martensen says that local police officers support his version of events. You can bet we'll continue to monitor this case.
A necessary part of life that no one particularly enjoys is the job interview: it’s tricky for the interviewee and taxing for the interviewer. Unless the interviewer gets a thrill out of asking why manhole covers are round or testing the applicant’s knowledge of medieval saints.
We’ve written about questions that shouldn’t be asked on interviews, because they can suggest a discriminatory basis for the employer’s failure to hire the job applicant. But can an interview that doesn’t include potentially discriminatory questions – just the failure to hire the applicant after the interview itself – provide the basis for the rejected applicant to allege discrimination?
Hiring executives may be interested to know the answer to this question, which was the central issue in an opinion in Hill v. Virginia Department of Transportation, released by a federal court in Virginia at the end of January. Read More ›
Court Order: You Shall Not Start Your New Job at that Oil Company Because We're Worried About Irreparable Harm to the Oil Company You Just Quit
Engineer Milos Milosevic may have thought that he and Schlumberger Technology Corporation were like oil and water when he recently left Schlumberger, which provides services to the oil and gas industry, to work for Halliburton Company, a direct competitor. On Friday, a Texas state court said not so fast, and issued a temporary restraining order (or TRO) against Dr. Milosevic that prohibits him from starting his new job at Halliburton. The court also ordered Dr. Milosevic to “restrain from using or disclosing [Schlumberger’s] trade secrets,” and to “immediately return” any of Schlumberger’s documents or other property. Schlumberger requested the TRO at the outset of a lawsuit that it filed against Dr. Milosevic for breach of a non-compete contract and misappropriation of trade secrets. Read More ›
You may have heard this week that Hasbro, the maker of the Monopoly board game, has decided to let go of one of the board’s signature tokens – the iron. The iron, according to NPR, seems to be a bit steamed behind a stoic exterior, while looking ahead to greener pastures. Of course, we have no idea yet if the iron has a claim for wrongful termination – perhaps there’s a wrinkle in his contract with Hasbro? – but we’ll certainly keep an eye on it, at least to avoid burning ourselves. It does seem, though, that whatever happens this guy always wins.
Turning to relevant matters involving people:
- We’ve written about the Family and Medical Leave Act, which turned 20 years old this week. On its birthday, some argue it goes to far, while others say not far enough – analysis of the issue from both sides is here. At the same time, the Department of Labor has published rules extending the reach of FMLA to veterans, military families, and certain airline employees.
- A former employee of BAE Systems, who worked for the defense contractor in Afghanistan, has filed suit against the company under the False Claims Act, alleging he was let go after he blew the whistle on the company’s billing practices, which he asserts were fraudulent and excessive.
- This one sounds, well, Solomonic to us: The California Supreme Court, in a unanimous ruling, held that where a bus driver proved she was terminated for a prohibited discriminatory reason (pregnancy), but the employer showed it had legitimate reasons to fire her even without the discrimination, then the bus driver could get attorney’s fees and injunctive relief – but not back pay, other damages, or reinstatement. The opinion in Harris v. Santa Monica is here.
- Finally, from the “signing doesn’t imply reading” department: Don Marsh, the former CEO of Marsh Supermarkets, a Midwestern grocery chain, testified this week in the company’s case seeking to recover about $3 million he spent on personal expenses. According to the report of his testimony here, Mr. Marsh said the company’s code of conduct – which might have prohibited the spending – didn’t apply to him because he “wasn’t aware of it,” even though he signed it.