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© 2016 Zuckerman Spaeder LLP

Showing 112 posts in Civil Litigation.

Can an Employer Back out of a Promise to Provide Advancement by Claiming That the Employee Committed Fraud?

Numerous decisions from the Delaware courts establish that a company cannot abandon its promise to advance legal fees and expenses when the covered director, officer, or employee properly invokes it.

The Delaware Supreme Court recently issued yet another decision upholding this principle, ruling in Trascent Management Consulting, LLC v. Bouri that an employer could not escape its promise to provide advancement by claiming that it was induced to provide the promise by the employee’s fraud. Read More ›

“Change of Control” Case Isn’t Governed By ERISA, Court Rules

When an employee brings a lawsuit involving a plan adopted by their employer, one question is whether ERISA—the Employee Retirement Income Security Act of 1974—applies.

ERISA is a federal law that requires a number of disclosures and safeguards for employee benefit plans. ERISA governs both employee welfare benefit plans (such as insurance or sickness plans) and pension benefit plans (such as retirement plans).

But it doesn’t apply to every plan adopted by an employer, as the recent decision in Hall v. Lsref4 Lighthouse Corporate Acquisitions, LLC, 6:16-CV-06461 EAW (W.D.N.Y. Nov. 10, 2016), shows. Read More ›

Court Nullifies CFO’s Employment Because of Prior Extortion Conviction

In lawsuits over contracts, parties sometimes assert defenses that contracts are voidable or void. A voidable contract is one as to which the party should have a choice as to whether it is enforceable or not; for example, when a 17-year-old (a legal minor) buys a car, he may have the option to choose whether to abide by the deal. By contrast, a void contract is one that is illegal because it violates the law or public policy. No one—neither hit man nor jilted spouse—can enforce a contract to commit murder.

The doctrine of void contracts arose recently in an employment case in Florida, Griffin v. ARX Holding Corporation. The plaintiff in the case was Nicholas Griffin. Griffin had a blemish on his resume: in 1998, he had pleaded guilty to extortion. Read More ›

Kiss Your Retaliation Suit Hello: Company Faces Trial after Changing Explanation for Firing

When an employee brings a lawsuit alleging that his employer retaliated or discriminated against him, courts typically assess the claim by using a burden-shifting approach. Under this approach, after the employer offers a “legitimate, nondiscriminatory reason” for its actions, the employee has to come forward with evidence showing that the reason was pretextual.

The recent decision in Stephenson v. Potterfield Group LLC serves as an example of how an employee can meet this burden. Read More ›

Hold on to Your (Top) Hat: ERISA Section 502(a)(3) May Be Used to Enforce the Terms of a “Top-Hat” Benefits Plan

Thanksgiving is typically a time for gratitude, gathering with family, and acts of kindness among fellow men and women. But in one recent case, a bank used Thanksgiving to force-feed a separation agreement to its outgoing president.

The bank later claimed that the ex-officer had released his rights to benefits under a “top-hat” benefits plan, even though it was not mentioned in the separation agreement. In Buster v. Compensation Committee of the Board of Directors of Mechanics Bank, the plaintiff alleged, and the court agreed, that the bank’s interpretation of the separation agreement did not fly.

Steven Buster worked as president of Mechanics Bank between 2004 and 2012. During his tenure, Mechanics Bank had two retirement plans. The first was the Supplemental Executive Retirement Plan (SERP), a so-called “top-hat plan” because it was available only to a few, select senior employees. The accrual of benefits for the SERP was frozen in 2008. In that year, the bank adopted a separate Executive Retirement Plan (ERP). Read More ›

A Bitter Pill for Ex-Rite Aid GC: Delaware Court Finds His 2015 Suit for Indemnification Untimely

Remember 2002? That year, A Beautiful Mind won best picture, and the University of Maryland won the NCAA basketball tournament. It is also the year that Rite Aid and its former General Counsel, Franklin Brown, began litigating over Brown’s indemnification rights. They are still fighting, which brings us to Brown v. Rite Aid Corp., CA No. 11596-VCL, the latest chapter in the 14-year-long dispute.

The Delaware Chancery Court is generally a forgiving forum for an director or officer seeking to vindicate indemnification or advancement rights conferred by a Delaware company. But there are limits, and a recent decision by the Chancery Court in the Brown case concerned one such limit: a claim for indemnification must be brought within three years of final disposition of the proceeding that triggered the indemnification demand. Read More ›

A Funny Thing Happened to the Forum Selection Clause

ColoseumWhen an employee sues an employer, the forum selection clauses in her employment agreement can affect where the claims can be litigated—but only if those clauses are enforced.

For example, we previously discussed a court’s decision not to enforce an employee’s agreement to arbitrate because the employer failed to countersign her employment agreement.

Two recent decisions from the federal district courts further illustrate how boilerplate forum selection clauses can impact an employee’s litigation rights upon termination, and how employees can avoid those clauses. Read More ›

Active Shooter Drill Backfires on Employer

After a spate of horrific shootings at schools and businesses across the country, employers started conducting unannounced “active shooter” drills to train employees how to react if a murderous gunman shows up at their workplace. Unsurprisingly, some of these unannounced drills have gone awry.

In 2013, the Pine Eagle Elementary School in Halfway, Oregon, population 286, held an active shooter drill that was too much for its employees to bear. Now, Pine Eagle finds itself in the middle of a lawsuit in Oregon federal court, brought by former teacher Linda McLean. Read More ›

“Some But Not All”: Delaware Court Awards Advancement to Former Officer, But Only for Part of a Case

When a former officer or director of a company must defend against legal claims, advancement of legal fees by the company can be critical to a successful defense. The Delaware Chancery Court frequently addresses issues related to advancement of fees for former officers and directors. For example—as we discussed in this post—that court recently resolved a claim by former Vice President Al Gore and a colleague for advancement of legal fees, ruling that they were entitled to advancement from the company that bought their employer (Current Media) and assumed Current Media’s indemnification and advancement obligations, even though they had never worked for the purchaser Read More ›

Employee’s Remote Storage of Employer Documents Results in Post-Termination Trouble

What happens when an employer tries to change the basis for terminating an employee?

Recently, the Supreme Judicial Court of Massachusetts considered whether an employer could change the basis for the termination from “without cause” to “with cause” and withhold severance benefits otherwise owed the former employee. In EventMonitor, Inc. v. Leness, the employee won the battle, but the cost may have consumed the spoils of war. Read More ›