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© 2015 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 150 posts by Jason M. Knott.

Court Rejects American Apparel Founder’s Bid for Advancement and Indemnification

When a company sues an executive, one question is who will pay the legal bills. As we covered earlier this year, that’s been an issue in Dov Charney’s ongoing legal battle with his former employer, American Apparel. Specifically, after American Apparel sued Charney for violating their standstill agreement by getting involved in shareholder suits and commenting to the press, Charney sued American Apparel in Delaware for indemnification and advancement. He claimed that the suit was brought “by reason of the fact” that he had been CEO, and thus fell within the indemnification provisions in various corporate documents. Read More ›

Court Disposes of Former CEO’s Claims Against Purchaser of His Company’s Trash Carts

Normally, in litigation between executives and employees, the executive will bring suit after he or she is fired, alleging wrongdoing by the former employer. This makes sense: the employer, after all, is the one who took the adverse action against the exec. And it’s the one that caused the damage, assuming that the executive can prove his or her claims.

The case of Stephen Stradtman, former CEO of Otto Industries North America, Inc., was not a normal case. For one thing, Stradtman wasn’t fired – he quit. And Stradtman didn’t sue Otto – he sued two other companies (Republic Services, Inc. and Republic Services of Virginia, LLC) and one of their employees. Read More ›

Was American Apparel’s Lawsuit Against Former CEO Dov Charney Brought “By Reason of the Fact” That He Was Its CEO, Such That It Must Advance His Legal Fees?

The legal saga of American Apparel and its founder and former CEO, Dov Charney, has more twists and turns than the latest season of Game of Thrones.  We’ve previously blogged about the sundry clashes between the two, including Charney’s ongoing arbitration for severance, the sexual harassment allegations against Charney, and a lender’s threat of default on a major loan after Charney was fired.

Now, Charney and American Apparel are battling in two separate cases in Delaware Chancery Court.  In the first, American Apparel has sued Charney for violating a standstill agreement by becoming involved in shareholder suits and commenting to the press.  The second case is a follow-on to the first: Charney has sued to force the company to advance his fees for the standstill lawsuit.  In this Game of Thrones, you win or you pay for your defense out of your own pocket. Read More ›

Non-Solicitation Clauses: They’re Up to You, New York

National employers sometimes include choice-of-law provisions in their employment agreements, selecting one particular state’s law even for employees who don’t work in that state.  For example, a company based in Massachusetts might ask its California employees to sign agreements selecting Massachusetts law.  Applying one state’s law to all of the employer’s relationships can make outcomes more predictable, especially when the employer knows that law well.

But not always, as the New York Court of Appeals held earlier this month in Brown & Brown, Inc. v. Johnson.  In Brown & Brown, the Court of Appeals refused to apply an employment agreement’s selection of Florida law, holding that New York law should determine whether a customer non-solicitation provision in that same agreement was enforceable.  Read More ›

Sixth Circuit Upholds Financial Planner’s Sarbanes-Oxley Win

Section 1514A of the Sarbanes-Oxley Act shields a whistleblower from retaliation if he reports “conduct [that he] reasonably believes” violates certain laws, including Securities and Exchange Commission regulations.  Last month, the Sixth Circuit held that the question of a whistleblower’s “reasonable belief” is a “simple factual question requiring no subset of findings that the employee had a justifiable belief as to each of the legally-defined elements of the suspected fraud.”  Rhinehimer v. U.S. Bancorp Investments, Inc., No. 13-6641 (6th Cir. May 28, 2015).  Based on this principle, the court affirmed a $250,000 verdict in favor of the plaintiff, Michael Rhinehimer.

According to the Court’s opinion, Rhinehimer was a financial planner for U.S. Bancorp who helped his elderly customer, Norbert Purcell, set up a trust and a brokerage account.  In November 2009, Rhinehimer went on disability leave, and asked a colleague not to conduct any transactions with Purcell.  The colleague didn’t follow the instructions, and instead put Purcell into investments that Rhinehimer believed were unsuitable.  (Unsuitability fraud under the securities laws occurs when a broker knows or reasonably believes certain securities to be unsuitable to a client’s needs, but recommends them anyway.)    Rhinehimer complained about the trades, but his superiors warned him that he should “stay out of the matter” and stop criticizing the colleague.  After Rhinehimer hired a lawyer, he was placed on a performance improvement plan and fired after he failed to meet it. Read More ›

In Reversal of Fortune, Court of Appeals Finds Ambiguity in Executive’s General Release

Last May, we covered a decision by a Michigan federal court that torpedoed Debourah Mattatall’s claims against her former employee, Transdermal Corporation.  Now, thanks to a recent decision by the U.S. Court of Appeals for the Sixth Circuit, Mattatall’s claims have been brought back to life.

To briefly recap the facts, Mattatall used to own a company called DPM Therapeutics Corporation.  She sold it to Transdermal and entered into a Stock Purchase Agreement and Employment Agreement with that company.  According to Mattatall, Transdermal didn’t comply with its obligations, and she sued it in federal court.  But the court quickly granted summary judgment, finding that Mattatall gave up her claims in a settlement agreement that resolved other litigation against her.

In that litigation, DPM’s minority shareholders challenged the sale to Transdermal, and Transdermal countersued those shareholders.  The parties to the litigation, including Mattatall, resolved the dispute and entered into a settlement agreement and a general release.  The release stated that “Transdermal, DPM, [another controlling owner], and Mattatall and each [minority shareholder] … release[d], waive[d] and forever discharge[d] each other” from any claims arising before the agreement was signed.  In Mattatall’s subsequent lawsuit against her employer, Transdermal, the district court ruled that this language released all claims that any party to the agreement had against any other party – even though Transdermal and Mattatall were on the same side in the shareholder litigation, and Transdermal reassured Mattatall that she wasn’t releasing her unrelated claims against it before she signed.  Because her claims against Transdermal fell within the “unambiguous” and “broadly worded” terms of the release, this evidence was irrelevant, and Mattatall was out of court. Read More ›

L’Oreal Lawyer Claims Company Fired Him When He Wouldn’t Pursue Problematic Patents

After firing its head patent attorney, Steven Trzaska, L’Oreal is now under fire from Trzaska in New Jersey federal court.  On April 16, 2015, Trzaska sued L’Oreal, claiming that his firing violated New Jersey’s Conscientious Employee Protection Act (“CEPA”).

In his complaint (available at Law360), Trzaska alleges that L’Oreal had a quota for its New Jersey office of 40 filed patent applications in 2014.  But, Trzaska contends, an outside consultant had previously found that many of L’Oreal’s patent applications were purely cosmetic, saying that “the vast majority of its inventions were of low or poor quality.”  Trzaska alleges that his superiors pressured him to file applications to meet the quota.  However, he told them that “neither he nor the patent attorneys who reported to him were willing to file patent applications that the attorneys believed were not patentable.”  Soon after, L’Oreal terminated him, saying that it was hiring a new “head of patents of the Americas.”  Trzaska claims that this explanation was pretext and that the company in fact fired him because he refused to file applications that were not patentable.

How do Trzaska’s claims line up with CEPA?  Read More ›

The Fashionable and the Furious: Dov Charney Seeks $40 Million from American Apparel

Last summer, we covered in depth the resounding repercussions from American Apparel’s decision to terminate its CEO and founder, Dov Charney.  Now, the sequel has arrived – and it promises lots of action.

Matt Townsend of Bloomberg Business reports that Charney has resumed his arbitration against his former employer, in which he is seeking $40 million from the clothing company.  Charney previously agreed to put his claims on hold while American Apparel made its final decision about whether to terminate him.  After an investigation, the board decided in December to cut Charney loose.  Read More ›

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  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 ›