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Showing 41 posts in Whistleblowers.
Here at Suits by Suits, we are thankful that the news about executive-employer disputes keeps flowing like gravy. This past month, we focused a lot of attention on non-compete agreements, many of which met the same fate as an unpardoned turkey. On a day as cold as chilled cranberry sauce, we sent a live correspondent to cover the oral argument in Lawson v. FMR LLC, in which the Supreme Court will decide whether employees of privately-held contractors of public companies have viable Sarbanes-Oxley claims. Finally, as per our holiday tradition, we recapped the history of Thanksgiving, in a post as entertaining as the most memorable Cowboys loss.
- Skunks, Conquistadores, and Killer Balloons: Why Thanksgiving Is the Best Tuesday (or Possibly Thursday) of the Year
November 27, 2013 | P. Andrew Torrez
- Texas Strictly Construes Application of Mandatory Arbitration Clause Despite Superseding Agreement with No Such Clause
November 25, 2013 | P. Andrew Torrez
- Will Fiduciary Liability Insurance Cover Severance Agreement Payments If The Company Can’t Make Them?
November 22, 2013 | William A. Schreiner, Jr.
- Upcoming Suits by Suits Webinar: Whistleblower Watch
November 21, 2013 | Jason M. Knott
- It Was The Added "0" That Did It -- Among Other Things
November 19, 2013 | William A. Schreiner, Jr.
- I Can't Quit You! - Why Quitting a Company May Not Mean Quitting Fiduciary Duties in Virginia
November 14, 2013 | Ellen D. Marcus
- Argument Recap: Five Takeaways from Lawson v. FMR LLC
November 13, 2013 | Jason M. Knott
- What I Don't Know About Your Non-Compete Can't Hurt Me, Right?
November 11, 2013 | Ellen D. Marcus
- Argument Preview: What to Look For in Lawson v. FMR LLC
November 7, 2013 | Jason M. Knott
- “Man Bites Dog” in the Fourth Circuit: Court Reverses Arbitrator’s Award and Enforces Release
November 6, 2013 | Jason M. Knott
- The Basics: Dodd-Frank vs. Sarbanes-Oxley Whistleblower Law
November 5, 2013 | Jason M. Knott
If you are interested in more information about legal issues involving executives and their employers, on December 10, 2013, Zuckerman Spaeder LLP partners and Suits by Suits contributing editors Ellen D. Marcus and Jason M. Knott will present a webinar titled “Whistleblower Watch: Big Issues in the Latest Whistleblower Cases Under Dodd-Frank, Sarbanes-Oxley, and the Internal Revenue Code.” In the session, Ms. Marcus and Mr. Knott will discuss the basics of these whistleblower and anti-retaliation provisions and address new developments in the law, including the Sarbanes-Oxley case currently pending before the U.S. Supreme Court. To register, click here.
On December 10, 2013, Suits by Suits contributing editors Ellen D. Marcus and Jason M. Knott will present a live webinar titled “Whistleblower Watch: Big Issues in the Latest Whistleblower Cases Under Dodd-Frank, Sarbanes-Oxley, and the Internal Revenue Code.” During the webinar, Ms. Marcus and Mr. Knott will discuss the whistleblower and anti-retaliation provisions of the Dodd-Frank and Sarbanes-Oxley Acts, the Internal Revenue Code, and other federal statutes. Their presentation will address the types of businesses and conduct that can be targeted by whistleblowers, the procedures that whistleblowers must follow to pursue and preserve a claim, the remedies available to whistleblowers, and more. Ms. Marcus and Mr. Knott will also examine the pressing issues under these laws that are being debated in the courts. This includes contradictory decisions about whether the Sarbanes-Oxley Act’s whistleblower provision covers employees of privately-held companies, such as investment advisers—an issue that is currently before the U.S. Supreme Court in the case of Lawson v. FMR LLC, which we have previously covered in various posts. To register for the webinar, click here.
On Tuesday, the Supreme Court heard oral argument in Lawson v. FMR LLC. As we explained in this post, Lawson presents the question of whether Sarbanes-Oxley’s whistleblower anti-retaliation provision (Section 806 of Sarbanes-Oxley, codified at 18 U.S.C. § 1514A) shields employees of privately-held contractors of public companies such as the plaintiffs, who are employees of investment advisers for Fidelity mutual funds. We editors of Suits by Suits don’t often get the chance to report live on the cases we cover, but an argument at One First Street was too tempting to pass up, even on a blustery Washington day. Here are five major takeaways that we drew from the argument (with the caveat that reading the tea leaves from an oral argument is always a difficult proposition):
1. The Court is uncomfortable with the scope of potential Sarbanes-Oxley claims that would result from the Fidelity employees’ interpretation of the statute.
A number of Justices pressed Eric Schnapper, who argued for the Fidelity employees, and Nicole Saharsky, arguing for the United States in support of the employees, as to how the Court could limit the reach of the statute if it holds that Sarbanes-Oxley allows employees of private companies to bring whistleblower retaliation claims. Justice Breyer posed a hypothetical involving an employee of a privately-held gardening company who reports on mail fraud by his employer, is fired, and then brings a whistleblower anti-retaliation claim, arguing that he is covered by Sarbanes-Oxley because his company has gardening contracts with public companies. Schnapper argued that the statute as written would cover the gardener, but the Justices were less convinced that Congress intended this kind of reach for Sarbanes-Oxley. Justice Breyer even commented that the fear of expanding the statute to cover “any fraud by any gardener, any cook, anybody that had one employee in the entire United States” was the “strongest argument” against the Fidelity employees’ position. Read More ›
Twitter’s founders are cashing in on Wall Street, and journalists are piggybacking on the news with articles like this one, which recaps 10 “surprising superstars” of the social network. No, Suits by Suits didn’t make the cut, but you can still follow us at @suitsbysuits, where we’ll bring you 140-word tweets about news related to executive-employer disputes. These are the kinds of stories we track:
- The Texas Supreme Court heard argument this week in Exxon Mobil’s dispute with former executive William Drennen. Jeremy Heallen of Law360 (subscription required), wrote that after Drennen retired from Exxon (@exxonmobil) and went to work for competitor Hess, Exxon claimed that he had forfeited his restricted stock under a “detrimental-activity provision” in his incentive plan. Exxon is seeking reversal of the lower court’s holding that the forfeiture violated Texas law, which disfavors “unreasonable” noncompetition agreements.
- AIG has settled a $274 million dispute with former real estate executive Kevin Fitzpatrick, reported (@nateraymond) Nate Raymond of Reuters. The terms are confidential, but Fitzpatrick’s lawyer says that he is “very happy.” Given the potential dollar amounts between $0 and $274 million, it’s easy to guess why.
- Rachel Louise Ensign of the Wall Street Journal (@RachelEnsignWSJ) (subscription required) covered a developing trend this week: more whistleblowers are coming from corporate compliance departments. As one example, Ensign described Meng-Lin Liu’s case against Siemens AG, which we covered here. The possibility of lucrative awards under the Dodd-Frank Act’s whistleblower program may be sparking the trend, although as Ensign points out, compliance officers are subject to additional restrictions under that program.
- In other whistleblower news, the Senate approved a bill to prohibit companies from retaliating against whistleblowers who report violations of the antitrust laws. Jennifer Koons of Main Justice (@jenkoons) said that the bill passed with bipartisan support. “Bipartisan” – does anyone still remember that concept?
- Newscaster Larry Conners is still trying to get back on television, despite a prior ruling that his noncompete agreement prohibited him from working for other TV stations in the St. Louis market for a year. Conners’s attorney asked the judge to modify that ruling, which restricted Conners to radio work, wrote (@STLSherpa) Joe Holloman of the St. Louis Times-Dispatch. We’ve previously examined Conners’s case here and here.
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 ›
The Dodd-Frank and Sarbanes-Oxley whistleblower laws are hot topics right now. A split of authority is developing in the federal courts over how an employee can qualify as a whistleblower and bring a retaliation claim under Dodd-Frank. And the Supreme Court will hear argument next Tuesday in a case, Lawson v. FMR LLC, that will require it to decide whether private employers can be subject to Sarbanes-Oxley retaliation claims by their employees.
As we at Suits by Suits continue to watch these issues, we thought it would be helpful to step back for a broader view of these important whistleblower laws. In the table linked here, we have summarized the important facets of each law. This table will serve as a reference point for new developments, placing them in the broader context of these whistleblower protections.
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 ›
The federal government is closed, but the Suits by Suits news continues to roll in:
- Johnson & Johnson shareholders are amending their derivative suit against the company and its directors, alleging that the company didn’t act properly when it decided that the lawsuit was not in J&J’s best interest. According to Joshua Alston of Law360 (subscription required), the shareholders argue that an investigation conducted by K&L Gates was a whitewash and that former CEO Bill Weldon shouldn’t have been paid $175 million over a six-year period. On the bright side, Weldon may have had a better tenure than the similarly well-compensated Alex Rodriguez.
- In more J&J news, subsidiary DePuy Synthes sued three of its former sales reps and their new company, Globus Medical, Inc., for allegedly violating noncompete agreements. Brad Perriello of Mass Device described the allegations, which accuse Globus of recruiting the reps “in an effort to rapidly build its own business . . . by appropriating and capitalizing on the goodwill, customer relationships, and confidential information that DePuy Synthes necessarily entrusts to its sales employees.”
- It’s not hard to translate how Rosetta Stone wants this forum dispute to come out. Carolina Bolado of Law360 (again, subscription required) reports that competitor Open English sued the company, along with several new hires, in Florida for allegedly breaching noncompete agreements. Rosetta filed a lawsuit in the employees’ home state of California seeking a declaration that the agreements weren’t violated, and has now asked the Florida judge to dismiss in favor of that lawsuit. Open English, meanwhile, argues that it won the race to the courthouse and is entitled to take its legal talents to South Beach.
- Big whistleblower news last week, as the SEC announced an award of $14 million to a whistleblower under its Dodd-Frank bounty program. Further details were not forthcoming, as the law protects recipients of bounties from having their identities revealed. Given all the press about miserable lottery winners, this could be a very good thing for them.
- A Virginia sheriff’s deputy is suing his former boss, claiming that he was fired after he reported that another officer slapped an inmate at the county jail. Rhonda Simmons of the Culpeper Star-Exponent writes that the deputy, who is pursuing a wrongful termination claim, was rehired after the sheriff who fired him was voted out of office.
Here at the Suits by Suits Global Operations Center, we’re a bit bummed that our beloved Washington Nationals Baseball Club has now exhausted any chance it ever had of making the playoffs, as have the almost-local Baltimore Orioles. All is not lost, however, because now we can turn our undivided focus to our Washington football team – the one with the name that is something of a point of dispute. The football season here will be exciting, even if it is off to a rough start.
Glum as our sporting life may be, it’s a worthwhile distraction from the possibility of a government shutdown, although perhaps not as fun as our other new Washington fad: debating the merits of green eggs and ham.
In any event, news of disputes between employers and executives – and news in related areas – continues to come in over our electronic transom. Here are the highlights:
- Here’s a story related to the Affordable Care Act that you may not have expected: a whistleblower suit arising out of the District of Columbia’s work to establish one of the exchanges called for by the new law. This week, a federal judge in D.C. allowed Jennifer Campbell’s suit against the District to proceed. Campbell, who seeks $5 million, alleges she was fired after she spoke out publicly about problems with a contract to set up the insurance exchange.
- We’ve written about former TV anchorman Larry Connors’ suit against his employer and the non-compete clauses at the heart of it. But non-competes are apparently common in the radio business too: this interesting article looks at a few different ones being used in the Atlanta market.
- Not sure how well this translates (sorry), but language education company Rosetta Stone is trying to dismiss a Florida lawsuit brought against it by competitor Open English. Open English alleges two employees violated non-compete clauses and stole trade secrets when they joined Rosetta Stone. Shortly after Open English sued Rosetta Stone in Florida, Rosetta Stone filed its own case against Open English in California; Rosetta Stone argues that the Florida case should be thrown out to allow the California case to go forward. The parties disagree over whether Florida or California law would apply to the dispute, as well – what’s Californian for “conflict of laws?”
- Esteemed colleague P. Andrew Torrez wrote last year about this suit against Abercrombie & Fitch, alleging the clothing retailer violated Title VII by discriminating against employees who wore hijabs; now, the case is apparently settled for just over $70,000 – details here and here.
Even in the pre-Labor Day lull, things still happen here at the Suits by Suits Global Operations Center in our Nation’s Capital. This week, we welcomed a new panda cub at the National Zoo, and celebrated the 50th anniversary of the famous March on Washington for Civil Rights, which remembered Martin Luther King Jr.’s historic “I Have A Dream” speech.
Things happened elsewhere in the broader world of disputes between executives, other employees and employers, too, including:
- The news anchor is still mad-as-h-e-double-hockey-sticks, and he’s not going to take it anymore: We’ve covered the public and somewhat bitter dispute between TV newsman Larry Connors and his former employer KMOV-TV in St. Louis; now, Connors has sued the station for defamation.
- J. Edgar Hoover, please call your office: An FBI special agent alleges the bureau retaliated against him after he reported that two colleagues had “allegedly engaged in sexual misconduct in addition to a ‘clear pattern of fraud, waste and abuse over a period of years.’”
- And another involving the FBI: Media giant Thomson Reuters is stridently rejecting a former employee’s argument that he was fired after he leaked information about alleged insider trading violations to the FBI. The company’s motion to dismiss the suit also says the former employee doesn’t qualify as a whistleblower under Dodd-Frank. Interesting fact about our modern trading exchanges: the case involves the disclosure of some economic data Thomson Reuters compiles to certain customers two seconds before others get it.
- Maybe he tried to steal that nasty Mucinex guy: A cough syrup manufacturer lost its bid to reinstate claims for breach of contract and unfair competition against a former employee when a New Jersey appellate court affirmed the lower court’s dismissal of them. The court ruled that the confidentiality provision in the manufacturer’s employment agreement was too broad to be enforceable under New York’s law, which applied to the dispute: “In sum, the confidentiality provision is unenforceable under New York law because it is overly restrictive in time and scope, does not further a legitimate business interest, is contrary to established public policy, and is unduly burdensome” to the employee. No word on any other side effects.
- Smashing a printer with a baseball bat may no longer be the real problem departing employees pose: “Half of all departing employees retain confidential company files following their termination,” concludes a study by Symantec reported here.
- “No severance pay but still crazy rich”: That’s the headline on this CNNMoney article about retiring Microsoft executive Steve Ballmer, and it says it all. The article explains that Microsoft doesn’t have retirement or severance for its executives, but Ballmer won’t be complaining too loudly: as the 22nd richest person in America, his Microsoft shares alone are worth over $11 billion.