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- Can Employers Discriminate Against Employees Based on Sexual Orientation? No, According to this Key Court
- Ex-General Counsel Dodged Privilege Claims Before $14.5 Million Verdict (pt 2)
- How Did This Ex-General Counsel Win $14.5 Million From His Former Employer? (pt 1)
- Beware the Deadlock: Delaware Courts Step in on Corporate Dysfunction
- Insider Trading and Related Risks for Executive Branch Employees: Pay Attention to the STOCK Act
- From New York and Delaware Courts, a Double Blow of Bad News for Sergey Aleynikov
- Headed for Overtime? Trump Administration Will Decide Fate of New Time-and-a-Half Rule
- A Closer Look at the New Lawsuit By Baylor Football Coach Art Briles
- Can an Employer Back out of a Promise to Provide Advancement by Claiming That the Employee Committed Fraud?
- Suits by Suits Named to Blawg 100
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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 11 posts from February 2014.
Here at our polar vortex bunker in the freezing Nation’s Capital, supplies are running short and we’re vigorously debating whether we should make a mad dash to the Suits by SuitsMobile and drive straight down to visit our colleagues in Tampa, Florida, or just tough it out and pray/chant/hope that the cold will ultimately break. In the meantime, we’ve defrosted the following interesting bits of news from the world of executive employment issues:
- Non-competes down in Dixie: this analysis looks at how North Carolina courts enforce non-competes after a merger, this one looks at Florida’s statute governing those agreements, and this one discusses two recent Tennessee cases about them – and the author concludes non-competes are “alive and well (and enforceable)” in the Volunteer State.
- And from about as far from Dixie as you can get – Anchorage, Alaska – comes this thoughtful article about how small business owners and departing employees should look at non-competes. It notes that execs who leave to set up their own businesses in violation of a non-compete face the customary lawsuit as well as a unique risk: they will have “proved themselves dishonorable and word travels fast in Alaska.”
- Arthur Laffer, please call your office and bring your famous curve: Hungary’s Constitutional Court struck down that country’s 98% tax on severance payments, finding it conflicted with EU rulings and regulations aimed at protecting property ownership.
- The bounties offered to tipsters under Dodd-Frank haven’t yet turned into the problem big companies feared, the Wall Street Journal reports.
- The Title VII case involving retailer Abercrombie & Fitch’s prohibition on employees wearing hijabs – which we’ve written about before – led to a relatively rare split decision in the Tenth Circuit Court of Appeals this week, on the procedural point of whether all of the justices of that court should reconsider a ruling in Abercrombie’s favor made by three of the justices (if you’re a fan of appellate practice and/or French, this was a petition for rehearing en banc). Some pundits say this split could motivate the Supreme Court to take the case; others say no.
E-mailing Work Documents to Your Personal Account Looks Fishy, Says NY Appeals Court in New Non-Compete Opinion
Non-lawyers often wonder why folks in our profession spend so much time and money poring over the documents and e-mails each side usually has to produce in litigation. Sometimes, these document reviews are the legal equivalent of looking for the proverbial needle in a haystack.
And sometimes, you find the proverbial needle – or needles. And when you do, and the success or failure of the case turns on that e-mail, or set of e-mails, then the time and money spent on the search for those things turns out to have been a wise and necessary investment.
Take the case of TBA Global, LLC v. Proscenium Events, LLC. TBA is an event planning company that “produces live event programs and marketing presentations for companies and branded products.” In the course of its work, it hired three senior employees – Santoro, Shearon, and Cavanaugh. While the exact terms of their agreements differ from each other, all three signed non-compete agreements with TBA that provided that if they ever left the company, they would not “directly or indirectly, communicate with clients or prospective clients” of the company for a period of time (one year for two of the executives, and two years for the other). Read More ›
There’s often a fine line between being a bona fide whistleblower and being just an angry plaintiff suing for wrongful termination. The plaintiff’s allegations of whistleblowing conduct can often be very similar to the conduct that gave rise to him or her being fired – setting up something of a Rorschach blot test for the court that is trying to figure out what’s really going on.
That’s the position doctor Mark Fahlen found himself in. Doctor Fahlen was fired by his employer, a group of doctors working at a hospital in California. The doctor said he was fired, in part, because he complained – as a whistleblower – about nurses in the hospital failing to provide adequate care for his patients because they failed to follow his instructions. The group of doctors fired Fahlen after the hospital revoked his privileges (apparently a necessary part of being a member of the group) because it said Fahlen had angry fights with those same nurses – and, therefore, he was fired because he wasn’t a suitable employee. So, essentially the same factual allegations could be whistleblowing or a basis for termination. Read More ›
Here at the Suits by Suits Worldwide Operations Center, weather continues to have us flummoxed, vexed, and annoyed: even though a famous Pennsylvania rodent discerned that we would have six more weeks of our brutal winter, we’ve had a pleasant warm spell that is about to come to a crushing end due to a storm front that goes by the curious name of "Texas Hooker" (we did not make that up). And we’re about to be plunged back into the depths of the polar vortex yet again – although our earlier bouts with the grim chill may have wiped out our area’s growing population of stink bugs.
In any event, we always take shelter from the storms, the cold, and the heat by digging into our Inbox of interesting developments in executive employment disputes and the issues that surround them, including:
- The Securities and Exchange Commission has filed an amicus brief in the Second Circuit, arguing that its interpretation of a “whistleblower” under Dodd-Frank – essentially an employee who reports wrongdoing either internally or to the SEC – should be followed. We’ve covered this case, Liu v. Siemens, before, for an earlier ruling holding that Dodd-Frank’s whistleblower protections don’t apply overseas.
- Staying with the whistleblower theme for a minute: government contractor Kellogg Brown & Root is being attacked by a whistleblower, who has complained to the SEC and the Justice Department that employees are forced to sign confidentiality agreements that prevent them from ever disclosing allegations of wrongdoing. This one could be interesting…
- Auto retailer Carmax is defending the arbitration clause in its employment agreement in a California appellate court, urging it to reject an employee’s argument that the clause is illusory because Carmax reserved the right to amend it at any time.
- The bankruptcy trustee for real estate company Grubb & Ellis is trying to claw back $650,000 from a former executive, alleging the payments in stock and paid time off were fraudulent.
- Finally, while we write a lot about non-compete agreements between executives and employers generally, we rarely see them between divorcing spouses – but a California court of appeal ruled on just such an issue this week. The court held that a judge’s order prohibiting one spouse from working in the same field – the rum importing business – as the other spouse didn’t violate California’s general ban on non-compete agreements because the order was an order, and not an agreement. It remanded the case, however, finding its five-year, worldwide ban on the one spouse getting into the rum importing business was overbroad.
Vanterpool v. Cuccinelli: Threading the Needle to Preserve a Free Speech Claim Against a Government Employer without Admitting to Lying Earlier About Who Spoke
Yesterday, we reviewed a recent decision by a federal court in Richmond in the case of Vanterpool v. Cuccinelli (yes that one), and when firing a government employee for speech or political affiliation may be okay under the First Amendment. The answer is that it may be okay if the employee is in a policymaking position. The court’s decision spells out why and what it means to have such a position. The case is also a helpful reminder that staking out one position in litigation may undermine another.
In her first complaint, Vanterpool apparently did not want to say that she posted the comment criticizing Cuccinelli on the Washington Post because she had denied doing so when she was confronted about the comment by one of Cuccinelli’s deputies, Charles E. James, Jr., who was also a defendant in the case. James later questioned Vanterpool’s credibility and asked her to resign or be terminated. If Vanterpool alleged in the complaint that she personally posted the comment, then that could have bolstered a defense by Cuccinelli and James that she wasn’t fired for speaking freely but for being dishonest. Read More ›
Earlier this month, a federal court in Richmond dismissed the lawsuit of a lawyer named Samantha Vanterpool who worked in the Virginia Office of Attorney General when Republican Ken Cuccinelli was Virginia’s AG and was running to be governor. (Democrat Terry McAuliffe won last November in a race that made national headlines.) Vanterpool claimed that she was fired on the basis of her political affiliation in violation of the First Amendment.
Vanterpool is a Republican but apparently not a Cuccinelli fan. She was fired after she allegedly posted a comment to a May 2012 Washington Post story about Bill Bolling, who was then challenging Cuccinelli for the Republican nomination. You can still see the comment (from “bzbzsammy”), which accuses “Cuccinelli of promoting Cuccinelli” while “Bolling is helping the GOP,” and of “NEVER [being] in the AG’s office and solely us[ing] the position for self promotion.” Read More ›
Love is in the air as couples celebrate Valentine’s Day with chocolates, flowers and romantic dinners. But there’s no love lost between some employers and their executives, as this week’s Inbox shows:
- BLR.com reports on a fascinating case involving Bruce Kirby, former CEO of Frontier Medex. In a lawsuit in Maryland federal district court, Kirby alleged that he was the beneficiary of a change-in-control severance plan and that Frontier kept him on for over a year solely for the purpose of defeating his severance benefits, even though it told him it was going to terminate him before that. The court ruled that he was not contractually entitled to severance, but could pursue a claim that Frontier interfered with his benefits, violating ERISA.
- Retired Ohio Bureau of Workers’ Compensation attorney Joe Sommer is asking the Ohio Supreme Court to review a decision that limited the application of whistleblower protections in that state. He believes that the Franklin County Court of Appeals overly limited whistleblower claims when it ruled that an employee had to report criminal conduct in order to be protected from retaliation.
- According to Benefits Pro, the EEOC “slammed” CVS over its severance deals in a lawsuit against the company in Illinois federal court. The lawsuit alleges that CVS required employees to sign severance agreements with five pages of small print, some of which bargained away the employees’ rights to communicate to agencies about practices that violated the law. CVS says that nothing in those agreements barred employees from going to the EEOC with complaints.
- Hook ‘em, Mack! Former Texas football coach Mack Brown, who resigned after this season, did get some love from his employer, as the San Francisco Chronicle reports that he will receive $2.75 million that he was owed under his contract in event of termination. He will also get a cushy $500k job this year as special assistant to the president for athletics.
- John O’Brien of Legal News Line reports that a California appellate court will allow a whistleblower’s claim of retaliation under the False Claims Act to be heard in state court. Dr. Scott Driscoll, a radiologist, claims that he was fired for complaining that his employer was committing Medicare fraud. When the employer sued him in state court, Driscoll counterclaimed for FCA violations. The California court decided that it had jurisdiction to hear the claim, rejecting the employer’s argument that federal courts have exclusive jurisdiction over FCA retaliation claims.
Twice as Nice for Employers: Federal Courts of Appeals Affirm Sarbanes-Oxley, Kansas Whistleblower Dismissals
For those of us who follow whistleblower law, Wednesday was a big day – and a good one for employers. In two separate federal appellate decisions, courts affirmed the dismissal of whistleblower actions based on very different issues. For potential whistleblowers and employers alike, the decisions demonstrate yet again the importance of the particular requirements and scope of the law that a whistleblower relies on to support his claim.
The first decision, Villanueva v. Department of Labor, No. 12-60122 (5th Cir. Feb. 12, 2014), comes to us from the Fifth Circuit. It involves William Villanueva, a Colombian national who worked for a Colombian affiliate of Core Labs, a Netherlands company whose stock is publicly traded in the U.S. Villanueva claimed that he blew the whistle on a transfer-pricing scheme by his employer to reduce its Colombian tax burden, and that his employer passed him over for a pay raise and fired him in retaliation for his whistleblowing. Read More ›
Our state and federal courts generally have two levels of courts: trial and appellate courts. The archetypal trial court is the knock-down, drag-out venue of TV drama, where judges issue quick rulings and juries weigh the testimony and documents to make their mysterious decisions. Appellate courts are much more monastic (and thus, much less entertaining for TV’s purposes). There, learned panels of esteemed judges review cold court records and legal tomes, reviewing the parties’ arguments and applying the law in order to reach their thoughtful and detailed decisions.
Appellate courts may not even entertain every argument that a party seeks to make. For the most part, to argue in the appellate court that the trial court made a mistake, a litigant has to “preserve” the error below – meaning that the litigant must give the trial court the opportunity to rule on the issue in the first instance. The failure to preserve error has tripped up many an appeal.
The case of Jeff Gennarelli, the former regional vice president of American Bank and Trust Company (ABT), gives us yet another example of this stumbling block. Read More ›
Our legal world was abuzz this week with the news that the law firm of Quinn Emmanuel will inaugurate a "work away week" in which its lawyers will be given $2,000, told to travel to anywhere in the world (so long as they have 24/7 internet access) and work from the beach or travel destination of your choice. We here at Suits by Suits aren't quite so fortunate, but we do have all the inside information about the latest disputes between employers and employees:
- Our friends at the Trade Secrets & Noncompete Blog have a nice piece analyzing the basics of the enforceability of covenants not to compete under New York law as seen through the lens of the recent federal court opinion in Reed Elsevier, Inc. v. TransUnion Holding Company, Inc. (No. 13 Civ. 8739, S.D.N.Y. Jan. 8, 2014).
- Speaking of noncompetes -- here's a unique wrinkle that came to our attention: Texas has a statute (§ 15.50 of the Texas Business and Commerce Code) that, in subsection (a) reflects the general LBI test we've discussed at some length, but in subsection (b) sets forth a list of statutory requirements for such clauses to be enforceable against physicians, including the requirement that the covenant must "provide for a buy out of the covenant by the physician at a reasonable price." Id., § 15.50 (b)(2). It's an idiosyncratic requirement, but -- as one employer recently found out -- it's not just boilerplate; by failing to include such a buyout, an appellate court bounced an otherwise-valid noncompete. LasikPlus of Texas, P.C. v. Mattioli (No. 14-12-01155-CV; 14th. App. Dist. Nov. 21, 2013). Our own Jason Knott discussed this case in depth back in December.
- Relatedly, the Texas-based computer forensics firm has released a white paper entitled "Top 10 Best Practices for Non-Compete Enforcement," intended as a guide for employers and their lawyers in drafting covenants not to compete that are more likely to survive an LBI analysis. The paper doesn't cover what we think is the most important issue -- knowing the specifics of your jurisdiction; see the above entries -- but does reflect some of the concerns we've continued to stress here since this blog's inception. It's worth a read.
- Finally, amidst the controversy over large new raises given by Goldman Sachs and JPMorgan Chase to chief executive officers Lloyd Blankfein and Jamie Dimon (once called "The Most Dangerous Man in America"), several executives have voluntarily turned down multi-million-dollar bonuses awarded to them by their respective boards, including Barclays CEO Antony Jenkins (doing so for the second year in a row), and IBM CEO Virginia Rometty, and in fact, all of IBM's senior management.