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- More on Non-Competes in Florida: Defining the “Legitimate Business Interest”
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Showing 14 posts in Motions to Dismiss.
Supreme Court Allows Employees of Private Contractors to Bring Sarbanes-Oxley Whistleblower Retaliation Claims
On Tuesday, the Supreme Court issued an opinion that may have sweeping implications for whistleblowers and employers. In Lawson v. FMR LLC, the Court decided that the anti-retaliation provision of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1514A) allows an employee to bring a claim even if that employee works for a private contractor or subcontractor of a public company. The Court’s decision could lead to a wide range of Sarbanes-Oxley lawsuits by outside counsel, private accountants, cleaning services, and others.
Lawson was a split decision. Justice Ginsburg, joined by Chief Justice Roberts, Justice Breyer, and Justice Kagan, and by Justices Scalia and Thomas “in principal part,” wrote for the majority. Justice Scalia wrote a separate concurrence, joined by Justice Thomas. And in an unusual grouping, Justice Sotomayor authored the dissent, joined by Chief Justice Roberts and Justice Alito. Today, we'll tackle Justice Ginsburg's opinion; tomorrow, we'll take a look at what Justices Scalia and Sotomayor had to say.
But first, a little background. Read More ›
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 ›
On Tuesday, November 12, the Supreme Court will hear argument in the most-watched case of this Term (at least for those of us who edit this blog). The case, Lawson v. FMR LLC, presents the question of whether an employee of a privately-held contractor of a public company can bring a whistleblower retaliation claim against his or her employer under the Sarbanes-Oxley Act of 2002. The plaintiffs in the case, and the parties who have appealed to the Supreme Court, are Jackie Lawson and Jonathan Zang.
In their lawsuit, Lawson and Zang claim that their employers – a group of privately-owned Fidelity subsidiaries that serve as “investment advisers” to publicly-held Fidelity mutual funds – retaliated against them for raising concerns about fraud. Here’s a handy chart from Fidelity’s brief that illustrates the relationship between the parties:
The First Circuit dismissed Lawson and Zang's claims, holding that Sarbanes-Oxley’s anti-retaliation provision only protects employees of public companies. Because Lawson and Zang worked on the blue side of the chart, and not the yellow side, they couldn’t bring a claim for retaliation. (The mutual funds on the yellow side have no employees; they do their business through their contractors on the blue side.)
What do Lawson and Zang argue?
The parties spend a lot of time parsing the language of the Sarbanes-Oxley anti-retaliation provision (18 U.S.C. § 1514A). In their opening and reply briefs, Lawson and Zang argue that the plain text of the law shows that Congress intended to shield employees of contractors of public companies from retaliation for reporting corporate misconduct. If Congress didn’t mean to protect those employees, they say, it wouldn’t have prohibited retaliation by “any officer, employee, contractor, subcontractor, or agent” of “such [public] company.” Under Fidelity’s reading of this provision, the language about contractors would only come into play if a contractor retaliated against a public company employee, and because that doesn’t happen in the real world, the use of the term “contractor [or] subcontractor” would be meaningless. Read More ›
A judge in the U.S. District Court for the Southern District of New York ruled Monday that the Dodd-Frank Act’s whistleblower protection provision does not protect an employee in China who was allegedly fired for raising concerns about corruption. Judge William H. Pauley III found “no indication” that Congress wanted Dodd-Frank’s anti-retaliation provision to apply extraterritorially, and as a result invoked the “strong presumption” against the international application of U.S. laws. Liu v. Siemens A.G., No. 13 Civ. 317 (WHP) (S.D.N.Y. Oct. 21, 2013).
The plaintiff in the case, Meng-Lin Liu, is a Taiwanese resident who worked as a compliance officer for Siemens China. Liu alleged that he was fired after giving a speech, attended by the Siemens China CEO, in which he claimed that Siemens would lose 30% of its business if it started following its compliance guidelines. Two months after his firing, Liu reported to the SEC that Siemens had violated the Foreign Corrupt Practices Act (FCPA). He then brought his suit for whistleblower retaliation, asserting that although Siemens is a German company, it has listed American depository receipts on the New York Stock Exchange. Read More ›
Federal Judge Upholds Jurisdiction Based on Employer’s Computer Fraud and Abuse Act (CFAA) Claim Against Former Employee
In a decision last week, Judge Ewing Werlein Jr. of the U.S. District Court for the Southern District of Texas addressed the question of whether an employer had successfully alleged a claim under the Computer Fraud and Abuse Act (“CFAA”), such that the employer could properly bring its numerous claims against former employees and their companies in federal court. He ruled that the employer had properly pleaded the CFAA claim, and that as a result, the court had subject matter jurisdiction over the case. Beta Technology, Inc. v. Meyers, Civ. No. H-13-1282, 2013 WL 5602930 (S.D. Tex. Oct. 10, 2013).
Before we get into the substance of the decision, some background is in order. Subject matter jurisdiction is an important issue for federal judges. If there’s no basis for subject matter jurisdiction, a case doesn’t belong in federal court. First-year civil procedure students learn this rule from the venerable decision in Capron v. Van Noorden, in which the Supreme Court allowed a plaintiff to obtain reversal of a final judgment because he hadn’t properly alleged that the court below had subject matter jurisdiction over his claim.
The two main categories for federal jurisdiction in non-criminal cases are diversity jurisdiction and federal question jurisdiction. Diversity jurisdiction, as defined in 28 U.S.C. § 1332, permits the federal courts to hear disputes between citizens of different states – i.e., “diverse” citizens – so long as more than $75,000 is at stake. Federal question jurisdiction, which is defined in 28 U.S.C. § 1331, allows the federal courts to address “all civil actions arising under the Constitution, laws, or treaties of the United States.” And under 28 U.S.C. § 1367, once the court has jurisdiction to hear one claim, it can hear any other claims that form “part of the same case or controversy,” even when those claims drag additional parties into the mix. Read More ›
Virginia Supreme Court Last Week: Courts Should Not Rule on Non-Compete's Enforceability in a Factual Vacuum
Last week, the Virginia Supreme Court reversed a trial court’s ruling that a non-compete agreement was unenforceable on its face as a matter of law. The VSC held that the trial court should not have decided the enforceability of the agreement on a demurrer (more about what that means below) because, in Virginia, whether a non-compete is enforceable (or valid) turns on whether it is “reasonable under the particular circumstances of the case” – that is, whether it is “narrowly drawn to protect the employer’s legitimate business interest, is not unduly burdensome on the employee’s ability to earn a living, and is not against public policy.” According to the VSC, this means that the particular circumstances of the case matter, and that the enforceability of a non-compete should not be decided “in a factual vacuum.” Read More ›
A recent decision by a federal court in Alexandria, Virginia, illustrates an important point about the trade secrets laws that is often missed: you can be liable even if you merely took your former company’s trade secrets (such as by downloading them onto your thumb drive) but did not use them or disclose them to anyone else. That’s what a company executive in the Alexandria case allegedly did, and the court allowed her former employer’s claim that she violated the Virginia Uniform Trade Secrets Act (the VUTSA) (which parallels many states’ trade secrets laws) to go forward. Read More ›
Paula Deen Ruling Reminds Us: Title VII Protects White Employees Who Are Discriminated Against for Their Association with Black Employees
Last week, a federal court in Georgia dismissed Lisa T. Jackson’s race-based discrimination claim against Paula Deen, her brother Earl “Bubba” Heirs, and their restaurant businesses. Earlier events in the Jackson v. Deen case – including Deen’s deposition testimony and what it may mean for alter ego liability – caught our attention at Suits by Suits. This recent ruling interests us as a reminder that it is not always the case that a white employee who works in an environment that is hostile to blacks has no claim for damages against her employer for race-based discrimination. Read More ›
It’s unseasonably cool here in Washington, DC, where most of our Suits by Suits editors toil. News about the latest in disputes between employers and executives, however, is always in season. Here are the latest headlines:
- Ruth Simon and Angus Loten of the Wall Street Journal brought us this excellent take on the rising tide of non-compete litigation. According to Simon and Loten, non-compete agreements are spreading beyond the executive ranks to sales representatives, engineers, and researchers. For more, check out our ongoing State-by-State Smackdown series on the changing law of non-competes in various states (here, here, here . . . and here).
- A conference call hosted by AOL’s chief exec Tim Armstrong took an unpleasant turn when Armstrong fired – on the spot – Abel Lenz, an employee who was videotaping the call. The New York Times reported that Armstrong later admitted that he made a “mistake” in the hasty firing, which was broadcast to a thousand employees. Lenz’s photos of his last moments at AOL later surfaced online at jimromenesko.com.
- The Third Circuit upheld a decision by the Luzerne County (PA) Retirement Board to terminate the benefits it was paying to a former county clerk, William Brace, based on Brace’s guilty plea to a bribery charge. Brace claimed that the termination violated his constitutional rights, but the court disagreed, holding that Brace was not entitled to a hearing before the decision. Brace’s crime appears to have been the acceptance of a $1,500 tailor-made suit from a county contractor, which puts this case in the unique category of Suits by Suits over Suits.
- Matt Reynolds of Courthouse News Service reported that IMAX has sued a competitor for trade secret misappropriation. IMAX’s complaint alleges that Gary Tsui, a former IMAX employee, sold its 2-D and 3-D conversion technology to the competitor, GDC Technology USA, which is now using the secrets to compete with IMAX. It calls Tsui an “international fugitive.” Sounds like this case may be exciting enough for the big screen.
- A former U.S. Bank manager, Serge Adamov, has successfully appealed the dismissal of his claim that he was terminated in retaliation for complaints of discrimination based on his Azerbaijani origin. The Sixth Circuit held that when an employee does not exhaust his remedies in the Department of Labor before bringing suit in federal court, that failure does not deprive a district court of jurisdiction over the case. As a result, because the bank did not raise a failure to exhaust as part of its motion to dismiss Adamov’s suit, the district court could not raise it on its own as a ground to get rid of the claim.