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- The CEO of iGate Had an Affair with An Employee, Was Fired and Is Now Suing the Company for Severance - Putting at Issue the Classic Question of "Cause" and Reminding Us of a Few Best Practices
- The Inbox – December Rain Edition
- California Court SLAPPs Down Employee’s Malicious Prosecution Suit Based on Employer’s Trade Secret Case Against Him
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- Visions of an Improper Noncompete Provision: Texas Court Rejects LASIK Clinic’s Injunction Request Against Former Doctor
- November 2013 Monthly Roundup
- Skunks, Conquistadores, and Killer Balloons: Why Thanksgiving Is The Best Tuesday (or Possibly Thursday) of the Year
- Texas Strictly Construes Application of Mandatory Arbitration Clause Despite Superseding Agreement With No Such Clause
- Will Fiduciary Liability Insurance Cover Severance Agreement Payments If The Company Can’t Make Them?
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The AmLaw Daily
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Screw You Guys, I’m Going Home: What You Need To Know Before You Scream “I Quit,” Get Fired, Or Decide to Sue the Bastards
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Showing 6 posts in Releases.
Texas Strictly Construes Application of Mandatory Arbitration Clause Despite Superseding Agreement With No Such Clause
We’ve written frequently about the long-standing practice in the corporate world of including mandatory arbitration clauses in employment contracts. Specifically, we’ve pointed out that although the practice may make sense for the employer when it comes to deterring potentially costly lawsuits brought by employees, those equities can shift when it concerns upper-level executives who generally have more means and wherewithal to fight a prolonged legal battle, be it in court or in front of an arbitrator.
In those cases – what we here at Suits by Suits consider our bread-and-butter cases – the employer may want to think twice about binding arbitration due principally to the risks of being stuck with an almost entirely unappealable adverse ruling; we’ve previously discussed how this has turned out poorly for employers such as Merrill Lynch and BDO.
Today, we continue to beat the drums of caution for both sides in our examination of a recent Texas appellate decision that makes it clear that many courts are looking for any way to kick a case out of the legal system in favor of arbitration. Read More ›
There’s a famous aphorism in journalism: “When a dog bites a man, that is not news, because it happens so often. But if a man bites a dog, that is news.”
The same is true of arbitration awards. When a federal court confirms an arbitration award, it isn’t newsworthy, because that’s what everyone expects will happen. But when a court tosses an arbitrator’s decision, it creates headlines.
On October 28, the Fourth Circuit made news by vacating an arbitration award issued to a former employee of an accounting firm. Kiran M. Dewan, C.P.A., P.A. v. Walia, No. 12-2175 (4th Cir. 2013). The former employee (Walia) was a native of Canada on a work visa who joined the Dewan firm as an accountant. When he was terminated, he signed a release in which he gave up any tort or contract claims he had against the company in exchange for a payment of $7,000. Three months later, the firm filed an arbitration against Walia, alleging that he had violated noncompete and nonsolicitation provisions in his employment agreement. Walia filed counterclaims alleging that the firm underpaid him in violation of visa regulations, breached his employment agreement, and fraudulently sought to withdraw its sponsorship of his visa. The arbitrator found that Walia’s release was legally enforceable, but also found that Dewan (the president of the firm) brought baseless claims and purposely sought to injure Walia’s immigration interests. As a result, the arbitrator awarded Walia over $450,000.
In the build-up to its decision, the Fourth Circuit recognized the dog-bites-man principles of confirming arbitration awards. It wrote that under the Federal Arbitration Act, “the scope of judicial review for an arbitrator’s decision is among the narrowest known at law because to allow full scrutiny of such awards would frustrate the purpose of having arbitration at all—the quick resolution of disputes and the avoidance of the expense and delay associated with litigation.” The Federal Arbitration Act and the common law only allow an arbitration award to be vacated when
- the award was “procured by corruption, fraud, or undue means”;
- there was “evident partiality or corruption” in the arbitrators, or either of them;
- the arbitrators “were guilty of misconduct”;
- the arbitrators “exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made”; or
- “an award fails to draw its essence from the contract, or the award evidences a manifest disregard of the law.”
In other words, to vacate an arbitration award, a party must show that the winning party bought the award; the arbitrators were crooked or obviously biased; the arbitrators botched the arbitration to such a degree that a final and definite award wasn’t even made; or the arbitrators didn’t follow the contract at issue and/or disregarded binding law. Read More ›
Since Lance Armstrong confessed to Oprah last week that he used performance enhancing drugs, speculation about the legal consequences came faster than Dave Stoller drafting the 18-wheeler in Breaking Away. Some of the speculation is about SCA Promotions’ demand that Armstrong return the $7.5 million that it paid him to settle a lawsuit. Armstrong brought the lawsuit after SCA (an insurer of a sponsor) refused to pay him bonuses for his Tour de France victories, citing doping allegations. Armstrong’s lawyer has said that SCA is out of luck: “When SCA decided to settle the case, it settled the entire matter forever. No backs. No re-dos. No do-overs. SCA knowingly and independently waived any right to make further claims to any of the money it paid.” Read More ›
Stop us if you’ve heard this before, but we’re still not a political blog.
Nevertheless, when the former Chairman of the Republican Party of Florida, Jim Greer, sues the Republican Party, Florida State Senate President Mike Haridopolous and Florida State Sen. John Thrasher for unpaid severance pay and $5 million in damages following his 2010 resignation – and the Republican Party replies with allegations that Greer engaged in fraud and money laundering, funneling $300,000 from the Republican Party to his own pockets, well, we can’t resist.
Twice, in fact. Back in September we advised you that Greer was filing suit, and that his lawyer was confident of victory. (“They’re [the Republican Party] dead. … Jim Greer will win the criminal case and Jim Greer will win the civil case.”)
Two days ago, the Republican Party struck back, moving to dismiss the portion of the lawsuit that includes the individual defendants, Sens. Haridopolous and Thrasher. But the Court rejected that argument, permitting Greer's lawsuit to go forward against both the Republican Party and the state senators, apparently on the theory that the individual legislators were acting as individuals and not on behalf of the Republican Party when they allegedly offered Greer $124,000 to resign back in 2010.
(Greer calls the offer a “severance payment”; media sources have not been so generous in their characterization.)
Although most of us don’t face the same sort of political issues that Jim Greer and the Republican Party of Florida do, many employers do face similar risks when they contemplate firing a prominent, high-level employee. For those employers, the “nightmare scenario” is that the employee will run down his or her former employer in the press, or possibly air dirty laundry that the employer would rather not have out in the open.
If you’re thinking that Jim Greer used that exact same strategy, you would be right. In his deposition – leaked to the press, of course – Greer called Republican Party officials “whack-a-do, right-wing crazies” not-so-secretly plotting to suppress minority votes in Florida. (The full transcript of Greer’s deposition can be found here.)
Often times, employers chafe at the idea of paying a high-level employee to go away; after all, they’ve already decided this person isn’t worth keeping. How can they possibly be worth paying? The practical reality is that sometimes the benefits of an amicable settlement – including a general release of all claims and non-disparagement and non-disclosure agreements – can leave the employer better off than simply rolling the dice.
We’re betting that the Republican Party of Florida wishes it had just paid Greer back in 2010.
Postscript: A grand jury indicted Greer on multiple fraud counts in 2010 and his criminal trial is scheduled for February, 2013.
The pre-Labor Day highlights of Suits by Suits:
- A producer of Martin Scorcese’s next film, The Wolf of Wall Street, filed a lawsuit against the production company for reducing her role. The New York Post reports that Alexandra Milchan alleges that she was owed $700,000 in fixed payments and the right to produce the film. The article includes a photo of Leo DiCaprio wearing … you guessed it … a suit.
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 ›