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© 2014 Zuckerman Spaeder LLP
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Jason M. Knott
Email | 202.778.1813

Jason Knott, a partner in Zuckerman Spaeder’s Washington office, represents individuals and companies in civil litigation, white-collar criminal matters, and government investigations. Some of his favorite cases have been “Suits by Suits.”

Showing 132 posts by Jason M. Knott.

Disgruntled Employee’s Alleged Parting Shot Leads to Federal Indictment

Computer VirusIt's no secret on this blog that when   employment relationships go sour,   criminal charges can be one potential     result.  Now we have another example, by way of the recent indictment of Arturas Samoilovas.  

According to the indictment, filed in Ohio federal district court, Samoilovas worked as a contract employee for Eaton Corporation as a financial analyst.  In April 2014, he applied for several full-time positions, but was told that he didn’t get the jobs.  Unhappy about the rejections, Samoilovas “accessed the Eaton Corporation’s computer system,” inserting “certain malicious computer codes … into six … financial spreadsheets.”  If executed, these codes would have resulted in deleted files.  In other words, they were malwareRead More ›

You’re In the Zone… Of A Massive Punitive Damages Verdict for a Pregnant Manager

On Monday, AutoZone found itself on the wrong end of a $185 million verdict in favor of a former store manager, Rosario Juarez.  Yes, you read that right.  $185 million.  This stunning verdict appears to have been the result of Juarez’s allegations of discrimination and retaliatory discharge, combined with an insider turned witness who provided extremely damaging testimony against the auto parts retailer.

In her complaint, Juarez alleged that AutoZone had a “glass ceiling” for women employees, which it kept in place through a hidden promotion process where open positions were not posted.  According to Juarez, she succeeded in cracking the glass ceiling, securing a store manager position, but when she became pregnant, she was treated differently by her district manager.  After giving birth, she complained about the unfair treatment and was soon demoted by the manager, who told her that she could not be a mother and handle her job.  Later, she was terminated as the result of a loss prevention inquiry, in which she refused to participate in a “Q&A” statement about a theft at the store.  Juarez alleged that the loss prevention department’s request for a statement was a pretext to fire her. 

We’ve spent a lot of time on this blog discussing allegations of pregnancy discrimination like these (see, for example, here, here and here).  The short of it is that a company can’t treat pregnant women, or women who have  given birth, differently than it treats other employees.  But we’ve never covered a verdict for pregnancy discrimination that looked more like a Powerball win than a litigation result. Read More ›

Can A Whistleblower Break the “Law” to Blow the Whistle?

A whistleblower generally shouldn’t break the law in order to prove his claims.  Indeed, the Whistleblowers Protection Blog says that this is a “basic rule,” and cautions that an employee who breaks the law while whistleblowing in order to get evidence will suffer from attacks on his credibility and may even be referred for criminal prosecution.  However, the parameters of this rule aren’t always so easy to follow, as the Supreme Court heard last week in the case of Department of Homeland Security v. MacLean

The MacLean case arose from a warning and text message.  In July 2003, the Transportation Security Administration (TSA) warned MacLean, a former air marshal, and his colleagues about a potential plot to hijack U.S. airliners.  Soon after, however, the TSA sent the marshals an unencrypted text message, canceling all missions on overnight flights from Las Vegas.  MacLean was concerned about this reduction in security, and eventually told MSNBC about it.  The TSA then issued an order stating that the text message was sensitive security information (SSI).  When it found out that MacLean was the one who disclosed the message to MSNBC, it fired him. 

MacLean didn’t take this while reclining; he challenged his dismissal before the Merit Systems Protection Board.  But he lost.  The Board decided that TSA didn’t violate the federal Whistleblower Protection Act by firing MacLean for his disclosure, because MacLean’s disclosure violated a TSA regulation that prohibited employees from publicly disclosing SSI.        Read More ›

Complaint Provides Further Details About Former CFO’s Defamation Suit Against Walgreen

When we first examined Wade Miquelon’s suit against his former employer, Walgreen, we didn’t have access to his complaint.  Now we do.  The complaint sheds more light on Miquelon’s allegations, helping to explain why they are causing a spiral of problems for the drug company.

As you may recall from our last article on the case, Miquelon alleges that Walgreen defamed him (in layman’s terms, lied) when it told the Wall Street Journal and investors that he had botched the earnings forecast for the 2014 fiscal year, and that his finance unit was “weak” with “lax controls.”  According to Miquelon’s complaint, Walgreen executives made these negative statements for an entirely different reason: they had an “unchecked desire” to push Walgreen’s merger with Alliance Boots to completion.  Miquelon alleges that an activist investor had threatened him for being “too conservative,” and that rather than standing up for him, the company’s CEO and its largest shareholder decided to disparage him in order to “deflect investor disappointment” and push through the merger.

Miquelon’s complaint is also somewhat of a public relations document, because it praises his work and goes into his interactions with the CEO and shareholder in great detail.  It even says that Miquelon was next in line to be CEO (although the complaint also says he turned down that chance, instead deciding to move on).  As to the allegedly botched earnings forecast, the complaint says that Miquelon recognized the problem well in advance of the call in which the company announced it was withdrawing its earnings goal.  It also says that he was pressured at the same time by the company’s CEO to raise his estimate of earnings per share that would result from the Alliance Boots merger.  The most explosive allegation on this front is that the CEO told him that he had “no choice” but to approve a $6.00 earnings per share estimate, rather than a lower one that would hurt the merger. Read More ›

This Year’s Scariest Posts on Executive Disputes

In honor of Halloween, we are looking over our shoulder at some of the most frightening news that we have brought to you this year on Suits by Suits:

  • Earlier this week, we told you the tale of a CEO who was hauled into court thousands of miles away and slapped with an employee’s wage bill.  That’s the kind of stuff executive nightmares are made of.
  • Bonfires are part of what makes Halloween special.  Unless they involve torching a laptop, destroying evidence, and getting hit with an adverse inference for spoliation at trial, which is what happened to one unhappy executive.
  • The SEC announced its presence as a boogeyman for employers who punish whistleblowers, filing its first Dodd-Frank anti-retaliation action against one company and ordering a $30 million bounty for another employee.
  •  Terror babies are scary, as anyone who’s seen Rosemary, Chucky, and Damien on screen knows.  Now, we have more terror babies to add to the mix, thanks to the bizarre saga of Rep. Louis Gohmert and fired Texas art director Christian Cutler.
  • Ever been lost in a hall of mirrors?  Just think how confused this executive was, after her employer told her that she wasn’t releasing her claims for a shareholder payment and then defeated those same claims based on … her release.
  • And perhaps the scariest story of all: the company that lost a non-compete dispute and then had to pay $200,000 of its opponent’s legal fees.  That’s like finding a razor blade in your Mounds bar.

Employee Wins Cross-Country Wage War Against CEO

The Supreme Court of Washington’s recent decision in Failla v. FixtureOne Corporation is noteworthy on two levels.

First, it involved the surprising claim by a salesperson, Kristine Failla, that the CEO of her employer (FixtureOne) was personally liable for failing to pay her sales commissions.  Typically, if an employee had a claim for unpaid commissions, you’d expect the employee to assert that claim against her company, not the chief.  But under the wage laws of the state of Washington, an employee has a cause of action against “[a]ny employer or officer, vice principal or agent of any employer ... who ... [w]ilfully and with intent to deprive the employee of any part of his or her wages, [pays] any employee a lower wage than the wage such employer is obligated to pay such employee by any statute, ordinance, or contract.”  Read More ›

A Closer Look At The Defamation Suit By Walgreen’s Former Finance Chief

The news hasn’t been great for Walgreen Co. over the past couple of months.  According to the Wall Street Journal, in early July, chief financial officer Wade Miquelon slashed his forecast for pharmacy unit earnings to $7.4 billion from $8.5 billion.  Miquelon left the company in early August.  Shortly thereafter, the Journal ran an article stating that Miquelon’s “billion-dollar forecasting error” had cost Miquelon his job and alarmed Walgreen’s big investors.

Now, Walgreen is fighting a battle on another front – against Miquelon.  Last week, Miquelon sued Walgreen in state court in Illinois, alleging that the company, its CEO, and its largest shareholder had defamed him.  According to Miquelon, the company’s big investors were told that Walgreen’s finance department was “weak” and had “lax controls.”

The four things that a defamation plaintiff must typically prove to prevail are: (1) the defendant made a false statement about him; (2) the statement was published, i.e., made, to one or more other persons; (3) the defendant was at least negligent in making the statement; and (4) the publication damaged the plaintiff.  Thus, if Walgreen and the other defendants can show that any harmful statements they made about Miquelon were true, they stand a good chance of defeating his claims.  On the other hand, as we covered in this article, if Miquelon can prove that the defendants engaged in a “premeditated scheme” to do him harm by falsely criticizing his performance, he might be able to recover a substantial verdict. Read More ›

Judge Approves $20 Million in Executive Bonuses From Bankrupt Company, Finding That Incentives Weren't "Lay-ups"

A bankruptcy can be hazardous to the health of an executive’s bonus check.  Sometimes, however, an executive can survive an attack on a bonus in a bankruptcy, and come out clean on the other side.  For example, we covered here how one executive succeeded in keeping most of his incentive payments based on the timing of those payments. 

Now, we have another lesson in how executives can keep their bonus checks despite a bankruptcy, from Judge Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware.  The company at issue in the case was Energy Future Holdings Corp. (EFH), a holding company with a portfolio of Texas electricity retailers.  EFH filed for Chapter 11 bankruptcy in April of this year. Read More ›

After Torching Laptop, CEO Feels the Heat of Sanctions

Computer on fireFire consumes all – including, perhaps, one CEO’s chance of winning his lawsuit.  Because G. Wesley Blankenship burned relevant evidence, the jury in his case will now be told that it should assume the lost documents were bad for him.  

Blankenship left his job as CEO of Security Controls, Inc. in early 2012.  He soon decided to put even more distance between himself and his employer by having a bonfire.  Into the flames went Blankenship’s laptop and his SCI paper files. 

This turned out to be a bad choice when Blankenship sued SCI and its directors in mid-2012, alleging that they weren’t giving him proper value for his shares in the company.  Blankenship’s lawyers eventually informed SCI of the fire, and SCI moved for sanctions, arguing that Blankenship had knowingly “spoliated” – i.e., destroyed – relevant evidence.  As we’ve previously discussed in this post, spoliation can have serious consequences for litigants.  Among these consequences are jury instructions that allow jurors to assume that the destroyed documents were detrimental to the party’s case. Read More ›

Foreign Whistleblower Cashes in on Report to SEC

SECOn September 22, the Securities and Exchange Commission announced its largest award to date under its whistleblower program: $30 million.  The SEC said that the whistleblower, who lives in a foreign country, came to it with valuable information about a “difficult to detect” fraud. 

In the order determining the award (which is heavily redacted to protect the identity of the whistleblower), the SEC commented that the claimant’s “delay in reporting the violations” was “unreasonable.”  In arguing for a higher bounty, the claimant contended that he or she was “uncertain whether the Commission would in fact take action.”  This argument, however, didn’t support a “lengthy reporting delay while investors continued to suffer losses.” Read More ›