The Inbox - February 15, 2013

This week in suits by suits:

• St. Louis-based Reliance Bank founder Jerry Von Rohr sued the bank for more than $400,000 in back pay and benefits, seeking a declaratory judgment that the bank is not prohibited from paying his severance package under the federal government's Troubled Asset Relief Program (TARP), which otherwise limits payments of so-called "golden parachutes."
• Maximillian Coreth, former managing director for Lehman Brothers, appealed a bankruptcy court's dismissal of his $19.6 million breach of contract lawsuit against Barlcays Capital Inc. to the U.S. Court of Appeals for the 2nd Circuit.  Coreth is arguing that Barclays assumed the obligations under his employment contract with Lehman Brothers when Barclays purchased Lehman Brothers in September of 2008.  Barclays successfully argued to the bankruptcy court and the U.S. district court that its Asset Purchase Agreement did not grant third-party beneficiaries any rights.  We'll discuss this case (and these important issues) in depth in the coming days.
• A federal district court judge split the baby in a lawsuit brought by former Detective William Hawkins against the Washington, D.C. Metropolitan Police Department, upholding the Department's general policy regarding its employees' disclosures of information to the media under the First Amendment, but found that the policy was unconstitutional as applied to Hawkins when he was disciplined for speaking to the Washington Post in 2009.
• A Texas state appellate court held that the architectural firm Nortex Foundation Designs, Inc. of Fort Worth, Texas wrongfully terminated a draftsman, Adam Young, who objected to copying designs that he felt infringed upon others' copyrights, holding that Young could not be fired for refusing to follow orders for which he had a "good faith belief" to be criminal.
• In a pair of excellent articles we think will be of interest to many of our readers, the Harvard Law School Forum on Corporate Governance and Financial Regulation (1) tackled the critical question:  "How Costly Is Corporate Bankruptcy for Top Executives?" and (2) hosted a survey piece by Richard J. Sandler, a partner at Davis Polk, entitled "Recent Developments in Executive Compensation Litigation."  Both are well worth a read.
• A former schoolteacher, Teresa Kemmer, has sued the Cumberland, Tennessee County Board of Education in federal court, alleging sexual harassment and retaliation pursuant to Title VII of the Civil Rights Act of 1964.  Ms. Kemmer's complaint alleges, among other things, that after she reported the alleged harassment to her supervisor, she requested to transfer schools but was told "that if she wanted a job she needed to stay where she was."
• Finally, here's one that's just bizarre.  In October of 2012, Oxbow Carbon executive Kirby Martensen filed a federal lawsuit against his former employer billionaire William Koch; he's supposedly the "quiet" one, unlike his more high-profile brothers Charles and David (although William donated $2 million to a Republican Presidential candidate Mitt Romney's "Restore Our Future" SuperPAC in 2012).  Martensen's lawsuit alleges that Koch kidnapped him, imprisoned him at Bear Ranch in Aspen, Colorado, and interrogated him in the company of a Gunnison County deputy allegedly on hand to "make sure he didn't run away."  Koch is back in the news after having filed a motion to dismiss in mid-January of this year; Martensen says that local police officers support his version of events.  You can bet we'll continue to monitor this case.

Plaintiff Loses 9 of 10 Claims, But Dodd-Frank Whistleblower Claim Survives

For a baseball player, batting .100 won’t get you into the Hall of Fame.  But for Rosanne Ott, a former Black Hawk helicopter pilot turned portfolio manager, batting .100 kept her case alive.  See Ott v. Fred Alger Mgmt., Inc., No. 11 Civ. 4418 (LAP) (S.D.N.Y. Sept. 27, 2012).

Ott sued her former employer Fred Alger Management (“Alger”), associated companies, and Alger’s CEO/CIO for alleged violations of the Investment Advisors Act, breach of contract, and the Dodd-Frank Act’s whistleblower provisions.  She also filed a derivative claim against the CEO/CIO on behalf of Alger’s shareholders for breach of fiduciary duty.  In her 10-count, 65-page amended complaint, Ott alleged that Alger had adopted a trading policy for her fund (the Health Sciences Fund) that allowed other Alger funds to make better trades at her fund’s expense.  

Alger and the other defendants moved to dismiss.  For four counts, Ott didn’t respond, and for five others, the district court decided that she had not adequately alleged supporting facts.  That left only her whistleblower claim, based on the anti-retaliation provision of the Dodd-Frank Act, 15 U.S.C. § 78u-6(h)(1)(A)(i).  (Say that cite three times fast.)  Read More ›

The Inbox

This week in suits by suits and other related items of interest:

• The EEOC has brought a lawsuit against Pace Solano -- a firm that provides services to disabled adults -- on behalf of a woman who claims that her hiring offer was rescinded after Pace Solano learned that she has partial paralysis in one of her hands.
• Four former sales representatives have brought a federal class action lawsuit against New York-based drug manufacturer Forest Laboratories, Inc., seeking more than $100 million in damages.  The lawsuit alleges that Forest Labs engaged in pervasive sexual discrimination against women, denying female employees -- particularly those who became pregnant or had young children at home -- the same pay, bonuses, and promotions as its male employees.
• Mary Ruotolo, the former executive director of a New York chapter of the Ronald McDonald House Charities, has sued her former employer under a New Jersey state whistleblower statute, alleging retaliatory termination after she began raising concerns about her chapter's financial condition.  Ms. Ruotolo's suit also alleges fraudulent inducement in connection with her hiring.
• In a case we continue to monitor, Law360 (membership required) reports that two former ArthroCare Corp. executives moved to dismiss a lawsuit by the SEC demanding repayment of bonuses and stock profits under section 304 of the Sarbanes-Oxley Act, arguing that the SEC's interpretation -- which would seek to clawback bonuses from executives even where those individuals have not been specifically charged with any wrongdoing -- would violate constitutional principles of fairness and due process.  A separate motion sought to declare Section 304 "void for vagueness."
• Law360 also reports that the trustee overseeing the Radar Networks, Inc. bankruptcy has reached a stipulation permitting a lawsuit to go forward against outgoing Yahoo, Inc. CEO Ross Levinsohn -- a former Radar director -- and other former Radar insiders, alleging fraud and conversion of approximately $3 million in Radar assets.  The trustee concluded that permitting the lawsuit would be "in the best interests of the estate" and recommended approval by the bankruptcy court.  Levinsohn replaced Scott Thompson as CEO of Yahoo! after Thompson was forced to resign amidst allegations of resume padding, as we discussed previously.
• Speaking of Yahoo!, Elizabeth Dilts of Law.com's Corporation Counsel has written an interesting article discussing non-compete agreements in light of Marissa Mayer's recent decision to leave Google, Inc. to become CEO at Yahoo! (following Levinsohn and Thompson).  Yahoo! is, of course, one of Google's chief competitors.

General Release = Major Issue

For a high-level executive leaving a company under less-than-ideal conditions, it’s as common as handing in keys to security and shutting down the computer for the last time.  In exchange for a severance payment, the executive is asked to sign the typical general release: “I hereby release my employer from any claims, liabilities, demands, or causes of action . . .”

Unsurprisingly, once an employee signs a general release, if he later sues, he is likely to face a quick motion to dismiss.   Read More ›