Subscribe

RSSAdd blog to your RSS feed

Follow Us

Twitter LinkedIn

Contributing Editors

Disclaimer
© 2015 Zuckerman Spaeder LLP
Photo of Suits by Suits
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 142 posts by Jason M. Knott.

Pao v. Kleiner Perkins: Some Lessons for Employers Thus Far

The ongoing trial in Ellen Pao v. Kleiner Perkins Caufield and Byers has made headline news across the country.  It’s being covered by the Wall Street Journal and USA Today, among other national publications.  Those interested in following the trial can monitor the #ellenpao hashtag on Twitter, or watch liveblogs from Re/code or the San Jose Mercury-News.

Why is the trial so newsworthy?  As we reported here, Pao claims that Kleiner Perkins, a prominent Silicon Valley venture capital firm, discriminated against her because of her gender and then retaliated because she complained.  She claims that she was not promoted to a plum senior partner position because she was a woman, and that the firm fired her because she complained and later sued it.  Her story involves sex, boorish behavior, and office intrigue that ranges from the mundane to the highly dramatic.

With that introduction, here are some -- of many -- takeaways for employers from what has transpired thus far: Read More ›

Former LSU Assistant Coach Sues School to Avoid $400,000 Buyout

LSU is used to battling with its Southeastern Conference (SEC) foes on the gridiron.  Now, it’s fighting in court with a former assistant who jumped ship to conference rival Texas A&M. 

John Chavis, LSU’s ballyhooed former defensive coordinator, left LSU for A&M at the beginning of this year, sparking headlines about “winning big” at his new home in College Station.  But storm clouds were brewing – LSU’s athletic director, Joe Alleva, said that he expected Chavis to comply with a $400,000 contractual buyout. 

On February 27, Chavis sued LSU in Texas state court, seeking to avoid the buyout.  He named A&M as a defendant as well, but only as an “indispensable party,” reported Jerry Hinnen of cbssports.com.  The Associated Press reported that A&M agreed to pay the buyout for Chavis if he was found to owe it.

LSU, seeking a home field against Chavis, quickly filed a separate case against him in Baton Rouge, claiming that it is entitled to receive the buyout money.

 Chavis’s contract reportedly said that if Chavis left in the first 11 months of his contract, before January 31, 2015, he would have to pay the buyout.   The sequence of events appears to be that Chavis gave a required 30-day notice on January 5 that he was resigning and terminating his contract.  Chavis says that he left LSU by February 4 – after the January 31 end to the buyout period – and didn’t join the Aggie payroll until February 13.  Read More ›

In Argument in Abercrombie & Fitch Case, Court Offers Solutions for Headscarf Issue

Yesterday, the Supreme Court heard argument in the religious discrimination case of EEOC v. Abercrombie & Fitch Stores, Inc., which made our list as one of our five issues to watch for 2015.  The case arises under Title VII, the federal law that makes it illegal for an employer “to discriminate against any individual with respect to h[er] compensation, terms, conditions, or privileges of employment, because of such individual’s . . . religion.”  The EEOC alleges that Abercrombie, purveyor of “authentic American clothing,” discriminated against Samantha Elauf on religious grounds.  The company refused to hire Elauf because she wore a headscarf, or hijab, to her job interview, and the company’s “Look Policy” prohibited employees from wearing “caps.” 

In earlier depositions in the case, Elauf’s interviewer at Abercrombie testified that she “assumed that [Elauf] was Muslim,” and “figured that was the religious reason why she wore her head scarf.”  The interviewer said that she went to her district manager to discuss the headscarf issue, and told him that “[Elauf] wears the head scarf for religious reasons, I believe.”  The interviewer testified that the district manager then told her not to hire Elauf because of the headscarf and said, “[S]omeone can come in and paint themselves green and say they were doing it for religious reasons, and we can’t hire them.”  As a result, the interviewer lowered Elauf’s “appearance” score on her evaluation, and Elauf didn’t get the job.

Despite this testimony, the Tenth Circuit still entered summary judgment for Abercrombie, holding that the EEOC’s discrimination claim could not proceed to trial because Elauf “never informed Abercrombie prior to its hiring decision that she wore her headscarf or ‘hijab’  for religious reasons and that she needed an accommodation for that practice, due to a conflict between the practice and Abercrombie’s clothing policy.” 

The fact that the Tenth Circuit granted summary judgment, even though the interviewer admitted that she assumed that Elauf wore the scarf for religious reasons, helps explain the concerns, and potential solutions, that the Justices raised in yesterday’s argument.  Read More ›

Former Venture Capital Partner Gets Her Day (Actually, Month) in Court

Silicon Valley is buzzing about the trial in Ellen Pao v. Kleiner Perkins Caufield and Byers LLP, which got underway on Tuesday.  According to USA Today, a UC-Berkeley professor says that you “can’t be within a stone’s throw of the Valley without hearing” about the case.

The cast of characters (described here by the San Francisco Business Times) includes a number of heavy hitters, including Pao herself.  Pao, a graduate of Princeton, Harvard Law, and Harvard Business School, is now the CEO of Reddit.  Kleiner Perkins is a well-known venture capital firm in Menlo Park, a city that has been described as the “center of the venture capital universe.”

Pao’s allegations are explosive.  She contends that she had a brief affair with a married junior partner who continued to harass her after she broke off their relationship.  Her claims about the firm go deeper than just this harassment; she contends that the firm had an overarching culture of discrimination against women, culminating in her dismissal in October 2012.  Read More ›

Fourth Circuit Upholds Jury’s Sarbanes-Oxley Award of Emotional Distress Damages to Fired CFO

The Sarbanes-Oxley Act’s whistleblower protection provision, 18 U.S.C. § 1514A, allows a wrongfully terminated whistleblower to recover “all relief necessary to make [her] whole.”  18 U.S.C. § 1514A(c)(1).  The statute then goes on to say that compensatory damages include reinstatement, back pay, and “special damages,” including expert fees and reasonable attorneys fees.  In an opinion issued this week, the Fourth Circuit held that Sarbanes-Oxley damages don’t just include these enumerated damages.  Rather, an employee can obtain other compensation for harm, including emotional distress damages.  Jones v. SouthPeak Interactive Corp. of Delaware, Nos. 13-2399, 14-1765 (4th Cir. Jan. 26, 2015).

The plaintiff in the case, Andrea Gail Jones, was the former chief financial officer of SouthPeak, a video game manufacturer.  According to the opinion, in 2009, SouthPeak wanted to buy copies of a video game for distribution, but didn’t have the cash to buy the games up front.  Instead, SouthPeak’s chairman, Terry Phillips, personally fronted Nintendo over $300,000.  When SouthPeak didn’t record this debt, Jones raised a stink, eventually telling the company’s outside counsel that the company was committing fraud.  The same day, the company’s board fired her.  Read More ›

Supreme Court Holds That TSA Whistleblower’s Disclosure Wasn’t “Prohibited by Law”

Last November, we covered the Supreme Court oral argument in the case of Department of Homeland Security v. MacLean.  As a refresher, MacLean was an air marshal who was fired by the Transportation Security Administration (TSA) after he blew the whistle to MSNBC on the agency’s plan to cancel marshal missions to Las Vegas.  After the argument, Prof. Steve Vladeck of American University predicted that the TSA would lose the case.

He was right.  On Wednesday, the Supreme Court issued its opinion, in which it held in favor of MacLean.  The TSA argued that it could fire MacLean because his disclosures were “specifically prohibited by law” in two ways: first, it had adopted regulations on sensitive security information, which applied to the information MacLean disclosed; second, a provision of the U.S. Code had authorized TSA to adopt those regulations.  Chief Justice Roberts, writing for the Court, rejected both arguments. 

As to the regulations, he wrote, Congress could have said that whistleblowers were not protected if their disclosures were “specifically prohibited by law, rule, or regulation,” but did not.  Thus, its choice to only use the word “law” appeared to be deliberate.  Further, interpreting the word “law” broadly “could defeat the purpose of the whistleblower statute,” because an agency could insulate itself from liability by promulgating a regulation that prohibited whistleblowing.  And as to the argument that Congress-passed “law” prohibited the disclosure, Chief Justice Roberts wrote that the statute in question did not prohibit MacLean’s disclosures.  Instead, it was the agency’s exercise of discretion, not the statute, that determined what disclosures were prohibited.  Read More ›

Individual Liability of Officers and Directors for a Corporate Data Breach

The hacking of Sony’s private data has been one of the biggest stories in the country over the past couple of months.  It won’t surprise anyone to learn that lawsuits have been filed over the breach.  Indeed, the plaintiffs in several class action lawsuits are seeking to consolidate their cases  into one massive Sony Data Breach Litigation case.

So far, the plaintiffs in those cases haven’t alleged claims against individual Sony officers or directors.  This begs a couple of questions: is that something that plaintiffs do?  And what kinds of allegations can they bring?

The answer is that a number of plaintiffs have brought claims against officers and directors who worked at companies that suffered data breaches.  Typically, they allege that the defendants did not properly manage the company’s cyber risks.

For example, in February 2014, Kevin LaCroix of D&O Diary brought to our attention lawsuits that Target shareholders filed against the company’s officers and directors, arising from the massive theft of Target’s private customer information.  The shareholders alleged that the company’s executives and board knew how important the security of private customer information was, and failed to take reasonable steps to put controls in order to detect and prevent a breach.  Further, they alleged, the defendants exacerbated the damage by publicly minimizing the breach. Read More ›

Five Issues in Executive Disputes to Watch in 2015

In our last post, we counted down our most popular posts of 2014, from A-Rod to Walgreen.  Now it’s time to take a look at the issues in executive disputes that are likely to draw plenty of attention in 2015.

1.            Dodd-Frank Bounties and Whistleblower Litigation on the Rise

In November 2014, the SEC released its annual report on its Dodd-Frank whistleblower award program.  The theme of the report is that Dodd-Frank is paying off – both for the SEC and for whistleblowing employees.  The SEC reported that it issued whistleblower awards to more people in its 2014 fiscal year than in all previous years combined, including a $30 million bounty to one whistleblower in a foreign country.  The number of whistleblower tips received continues to increase, and we expect news of more substantial awards in 2015.  Meanwhile, litigation over various Dodd-Frank issues, such as whether a whistleblower claim is subject to arbitration, whether the shield against whistleblower retaliation applies overseas, and whether a whistleblower must report to the SEC in order to bring a retaliation claim, will continue to percolate in the federal courts.

2.            The Supreme Court Weighs in on Employment Issues

A couple of key Supreme Court cases will address employee rights that apply across the board, from the C-suite to the assembly line.  In Young v. United Parcel Service, the Court will decide whether, and in what circumstances, the Pregnancy Discrimination Act requires an employer that accommodates non-pregnant employees with work limitations to accommodate pregnant employees who have similar limitations.  And in EEOC v. Abercrombie & Fitch Stores, Inc., the Court will address whether an employer can be liable under the Civil Rights Act for refusing to hire an employee based on religion only if the employer actually knew that a religious accommodation was required based on knowledge received directly from the job applicant. Read More ›

Suits by Suits’ Greatest Hits of 2014

Who doesn’t love the year-end countdown?  We’re here to offer you one of our own – our most-read posts in 2014 about executive disputes.  The posts run the gamut from A (Alex Rodriguez) to Z, or at least to W (Walgreen).  They cover subjects from sanctified (Buddhists and the Bible) to sultry (pornographic materials found in an executive’s email).  Later this week, we’ll bring you a look at what to expect in 2015.

Without further ado, let the countdown begin!

8.            The Basics: Dodd-Frank v. Sarbanes-Oxley

This post is an oldie but a goodie.  It includes a handy PDF chart that breaks down the differences in the Dodd-Frank and Sarbanes-Oxley whistleblower laws.  Each of these laws continues to be a hot-button issue for plaintiffs and employers.

7.            When Employment Relationships Break Bad

America may have bidden adieu to Walter White and his pals on Breaking Bad, but employment relationships continue to spin off in some very unpleasant ways.  Such was the case with Stephen Marty Ward, who ended up in federal prison after he threatened his employer with disclosure of its trade secrets, as we covered in this post. Read More ›

The Face That Launched A $50 Million Lawsuit

Helen of Troy isn’t just a famous mythological beauty.  It’s also a publicly-traded maker of personal care products.  And now, it and its directors are defendants in a suit by Helen of Troy’s founder, Gerald “Jerry” Rubin.

Executives who bring suit against their former employers frequently want to show that they were terminated for reasons other than performance, and Rubin is no different.  In his complaint, as reported by El Paso Inc., Rubin describes the history of Helen of Troy and its staggering growth.  From humble origins – a “wig shop in El Paso, Texas” – Helen of Troy grew into a “global consumer products behemoth, generating revenues in excess of approximately 1.3 billion dollars.”  And then the roof caved in.  Rather than “celebrating [Rubin’s] extraordinary success,” Rubin alleges, Helen of Troy’s directors turned on him in order to save their own skins, and eventually forced him out of the company.

Why did the directors need to sacrifice Rubin to save their positions?  According to Rubin, the answer lies with an entity called Institutional Shareholder Services (“ISS”).  ISS is a proxy advisory firm that conducts analysis of corporate governance issues and advises shareholders on how to vote.  Because shareholders often follow ISS’s recommendations, it can have substantial influence over the affairs of publicly-traded companies.  Indeed, some participants in a recent SEC roundtable suggested that ISS could have “outsized influence on shareholder voting,” or even that it has the power of a “$4 trillion voter” because institutional investors rely on it to decide how to vote.

Rubin alleges that if ISS decides a CEO is making too much money, it will demand that the compensation be cut or that the CEO be fired.  If its demand isn’t followed, it will “engineer the removal of the board members through [a] negative vote recommendation.”  Board members then will cave to ISS’s wishes to preserve their own positions.

Rubin claims that this is what happened in his case. Read More ›