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Showing 15 posts from June 2013.

The Inbox - June 28, 2013 - You Couldn't Make This Stuff Up Edition

  • Chinese workers at the Beijing factory of U.S. company Specialty Medical Supplies are using a unique negotiation tactic in a dispute over severance pay:  they have barricaded the company's owner in the factory for going on five days.
  • The Iowa Supreme Court decided to reconsider its ruling in December (which we reported on at the time) that dental assistant Melissa Nelson could not have her gender discrimination claim against her former boss James Knight tried to a jury.  In December, the all-male court agreed with the trial court that - even though Knight advised Nelson that she would know her clothes were too revealing if his pants were bulging and later fired her at his wife's urging - no reasonable juror would find that Nelson's gender was a motivating factor in Knight's decision to fire her.
  • The New York Court of Appeals has ruled in the case against Starbucks over its tip-pooling practices that was brought by baristas, shift supervisors and assistant store managers ("ASMs") that employees with meaningful authority or control over subordinates (which can fall short of the power to fire subordinates) may not, under New York law, share in the tip pool.  You may recall (as we reported here) that the U.S. Court of Appeals for the Second Circuit certified this question to New York's highest state court late last year.  It is now up to the Second Circuit to decide how to apply the New York court's ruling in the particular circumstances of the Starbucks case.
  • A Georgia federal court has dismissed a religious discrimination lawsuit filed by a nursing supervisor against a hospital after the hospital demoted her following an investigation into her urging of a subordinate nurse to stop "the practice of homosexuality" as un-Christian. 
  • The Board of Men's Warehouse has further elucidated its reasons for kicking out George Zimmer, the company's founder and executive chairman, last week - including that Zimmer apparently advocated for selling the company and was met with resistance in management and on the Board.

Paula Deen's Testimony May Also Have Some of the Ingredients for an Alter Ego Theory of Liability

Fried Chicken Yesterday, we observed that Paula Deen’s deposition testimony in the case filed by Lisa Jackson may be used to prove that one or more companies owned by Deen must pay for Jackson’s damages resulting from assault and battery by Deen’s brother, Earl “Bubba” Heirs, assuming that Jackson proves assault and battery. We said that, if Heirs worked for the companies, and the companies knew of Heirs’ misconduct and either expressly adopted it or implicitly approved of it, then the companies could be found vicariously liable based on a theory of ratification.  But what if Heirs only worked for one of the companies?  If Heirs is found liable, could the other companies also be found liable?  They could, based on a theory of alter ego, and Deen’s testimony may be helpful in supporting the theory. Read More ›

Paula Deen's Testimony May Have Some of the Ingredients for a Court to Find Deen's Companies Liable for Assault and Battery

Paula DeenOnce known for her frying, Paula Deen is now known for her firing.  On Sunday, the Food Network announced that it would not be renewing Deen’s contractPublic debate has followed about whether Deen’s deposition testimony last month that she used the N-word in the past justified the network’s action.  That’s a business decision for the network, not a legal question.  However, the lawsuit that Deen was testifying in is chock-full of legal questions of the kind that fascinate us at Suits by Suits – starting with questions of ratification, or when an employer can be held liable for the intentional wrongdoing of one employee towards another employee.  Deen’s testimony is relevant to these questions.  Read More ›

The Inbox - First Day of Summer Edition

Suits HangingYou’re gonna be interested in this week’s Suits by Suits news – I guarantee it:

  • Wednesday’s controversial dismissal of George Zimmer, Men’s Wearhouse pitchman and founder, sent reporters into a tizzy as they competed to come up with the best lead.  Tiffany Hsu of the LA Times is the early leader in the clubhouse, starting her article with “The one thing George Zimmer couldn't guarantee was his job at Men's Wearhouse.”  Other candidates: Gary Strauss of USA Today (“Men's Wearhouse no longer likes the way George Zimmer looks.”) and  Michael Smith of the Deseret News (“He's not going to like the way this looks. I guarantee it.”).
  • The Harvard Law School Forum on Corporate Governance and Financial Regulation offered this interesting take on whether attorneys can be Dodd-Frank whistleblowers, from Lawrence West of Latham & Watkins.  The main point: the SEC accepts that attorneys can blow the whistle and disclose client confidences in some limited circumstances, although state ethics rules about maintaining those confidences also will come into play.
  • Joe Davidson of the Washington Post covered the whistleblower implications of Edward Snowden’s disclosures about NSA surveillance programs.  Davidson explained that national security contractors are missing the protections and normal reporting channels that are present for most federal employees who want to blow the whistle on waste, fraud, and abuse.  Of course, even those channels don’t permit a whistleblower to take classified info to the press, wrote Pete Williams of NBC News.
Read More ›

Simon Say-On-Pay Lawsuit Will Continue

Stock CertificateMy kids love the game.  We all know the rules: you only act if the caller says the words “Simon Says.”  If those words don’t precede the command, then don’t move – or else. 

The current lawsuit by Simon Property Group (“Simon”) shareholders in Delaware Chancery Court is kind of like a grown-up game of Simon Says, although in this version, the shareholders issue the commands, and Simon can’t act until they give permission. 

The lawsuit involves Simon’s alleged promises that it would tie compensation to performance and that shareholders would have the opportunity to vote on material changes to compensation.  After making those promises, Simon raised the pay of its CEO David Simon.  (The CEO’s surname and the name of the company are no coincidence.)  The Simon shareholders now claim that NYSE listing rules and Treasury regulations required the company to hold an investor vote before amending its stock incentive plan and granting David Simon a large stock award that was not based on performance. 

Thanks to a recent ruling by Chancellor Leo Strine, their case will proceed, reports Jef Feeley of Bloomberg.   Read More ›

The Inbox, Almost-Derecho Edition

Another fun week here at our headquarters in Washington, D. C., where a predicted large storm turned out to be mainly a bust, leaving forecasters to debate why.  Here, though, are a few items that without debate are of interest:

  • Johnson & Johnson won at the First Circuit Court of Appeals, which affirmed a lower court’s dismissal of a whistleblower’s suit.  The whistleblower had alleged J&J was paying kickbacks, but was unable to prove those allegations through discovery during the suit, and the appellate court held that the trial court’s limits on discovery were legitimate.   
  • Staying in the whistleblower theme, the U. S. Department of Labor agreed to pay an alleged whistleblower $820,000 this week, following a 2012 court finding that Labor – ironically enough – created a hostile work environment and tampered with the long-time employee’s leave balances.   
  • But whistleblower claims have their ups and downs – like the elevator inspection business.  This week, the D. C. Circuit Court of Appeals held that a zealous inspector could not muster enough support for his claim that his supervisors retaliated against him after he complained that his employer, the District of Columbia’s department that regulates and inspects elevators, wasn’t being thorough enough in its task. 
  • And finally, here’s a colorful dispute we’ll keep an eye on between Larry Connors, a former anchor at KMOV-TV in St. Louis, and the station.  Connors was fired shortly after he claimed that the IRS targeted him for an audit after he did a harsh interview with President Obama.  He then filed suit, alleging he was fired without cause in violation of his contract.  This week, Connors rejected the station’s offer to resolve his case, saying KMOV’s condition that he not work in the St. Louis broadcasting market was unacceptable.  We’ll keep an eye on this one. 

Not-So-Special Delivery: First Circuit Rejects DHL Executive’s Bonus Verdict

DHLWhen a business adopts a company-wide bonus plan and gives itself discretion to administer it, can an executive bring a breach of contract claim challenging the exercise of that discretion?  According to the U.S. Court of Appeals for the First Circuit’s decision last week in Weiss v. DHL Express, Inc., the answer is no.

Jeremy Weiss was a director of national accounts for DHL.  In 2007, DHL told Weiss that it had selected him to participate in its “Commitment to Success Bonus Plan.”  Under the plan, Weiss would receive a $60,000 bonus if he stayed with the company through 2009, and another $20,000 bonus if the company met its objectives in that year.  There was a catch, however: the plan documents gave DHL’s Employment Benefits Committee the “full power and discretionary authority” to administer the plan, and its decisions would be “final and binding” on the participants. 

In October 2008, DHL amended the plan, making all $80,000 of the bonus contingent on Weiss’s continued employment, with an installment of $20,000 in January 2009 and the remainder in January 2010.  If Weiss was terminated “without cause,” he would still get the money; if terminated for “good cause,” he would not receive it.  DHL paid Weiss the first $20k – however, when it terminated him in September 2009, it refused to pay the remaining $60,000, saying that he had been terminated for “good cause” as the result of failing to supervise his subordinates’ billing practices.

Weiss sued for the rest of the money, and the case proceeded to trial on his breach of contract claim. Read More ›

Best Buy's Broad New Noncompete

As you probably know by now, we here at Suits by Suits have been tracking the rapid developments in state law governing the interpretation and enforceability of covenants not to compete contained in employment agreements.  (Our most recent posts on the subject are here and here.)  Generally, the theme at the state level has been towards restricting the scope and enforceability of such clauses; be it California’s decision to essentially prohibit all such noncompete provisions, or Massachusetts’s more nuanced attempt to narrow the scope of noncompete clauses by statute.

Today, however, we look at how the private sector – specifically, international consumer electronics retailer Best Buy – has struck back.  Read on.... Read More ›

The Inbox – Hurricane Season Already? Edition

Let’s just be clear about one thing today.  Our great colleagues in Tampa may be used to hurricanes and tropical storms all the time.  But for those of us in Zuckerman Spaeder’s Washington, Baltimore, and New York offices, it’s far too early to have to deal with the “remnants of Hurricane Andrea” that are passing overhead today. 

Or maybe we’re just a little bummed that the Nats have fallen below .500.  

In any event, there’s been a lot of interesting stuff in The Inbox – take a look below: 

The judges in this one won’t be sitting in the balcony:  A film editor on Walt Disney’s Muppets movie has sued the company, alleging it failed to protect her from racial and gender discrimination.

Employment agreements cross into Canada just like, uh, whatever we export to them any more: An interesting piece on a decision by a court in British Columbia, holding that an employee of both Verizon and its Canadian subsidiary was entitled to receive notice in advance of her termination under Canadian law.

Do you want a non-compete with that flat screen:  Best Buy, according to the Minneapolis Star-Tribune, is expanding its use of non-compete agreements beyond the C-Suite.  Under the new plan, vice-presidents who want to be eligible for the electronics retailer’s stock bonus plan will need to agree not to work for a competitor for a year after leaving the company. 

“And you should see how quick he is with the collection plate”: Two former teachers at a California religious school claim in their suit against the school that they were fired for failing to provide “pastoral reference letters” and for refusing to go to spiritual counseling.  They allege  religious discrimination, wrongful termination, and retaliation under California law, and seek compensatory and punitive damages. 

From the “unusual job requirements” department: Staying in the explosive zone of religion and the workplace, this is a great story from Courthouse News about an urban planner in Tybee Island, Georgia – a nice-looking resort town on the Georgia coast where you can rent Southern chef Paula Deen’s personal vacation home  -- who alleges he was fired because he: 1) wasn’t Episcopalian – he was Mormon – and refused his supervisor’s suggestion he go to an Episcopalian church to “fit in” with the community; 2) refused her suggestion that he go drink at the local bar, Hucapoos, also to fit in; and 3) refused her suggestion that he fit in by playing bingo and other card games. 

And that’s three: The excellent Blog of the Legal Times reports that Booz Allen Hamilton now faces a third gender discrimination suit by a former principal in its legal department.  Carla Calobrisi says she was demoted, subject to a glass ceiling that wouldn’t allow women over forty to advance, and ultimately forced to resign; the consulting firm calls her suit “curious” because she voluntarily resigned, it claims, over two years ago. 

American Airlines CEO Tom Horton One Step Closer To Free Lifetime Travel. Oh, And $20 Million

American Airlines JetAmerican Airlines’ CEO, Tom Horton, moved one step closer to receiving the $20 million severance payment he’s negotiated with the bankrupt airline.  On Tuesday, the bankruptcy judge hearing American’s case allowed the payment to stay in the airline’s disclosure statement (approval of the statement is a predicate step to ultimately “reorganizing” and exiting bankruptcy).  The approval comes over strenuous objections by the U. S. Trustee, who argued that Horton’s payment violated bankruptcy law.  The judge’s decision isn’t final, and the issue can be revisited down the road, but the fact that it stayed in the disclosure statement (and will be presented to the airlines’ creditors for approval) is one more hurdle cleared for Horton. 

We’ve written about this payment here, here, and here.  And, no, we don’t write about it so much because we’re jealous of the substantial payment Horton may receive; it’s what this case says about severance and golden parachutes generally.  Although the lifetime of free travel he and his wife would also receive under his severance agreement is, frankly, kind of cool.