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Showing 38 posts in Wrongful Termination.
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 ›
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.
A Baltimore police officer claimed she was fired because she got married. The police department agreed. The problem was that the officer married Carlito Cabana, an incarcerated murderer and the “supreme commander” of a prison gang called Dead Man, Inc. The question presented was whether the police department’s action violated the officer’s “constitutional right to marry and to engage in intimate association.” The Maryland courts didn’t think much of that claim, see Cross v. Baltimore City Police Dep’t, and it does seem as though the police department had a point.
But what about Mr. Cabana? Surely Cabana’s “employer,” nominally a private corporation, could not have been pleased with his choice of spouse, either. (Let’s ignore Dead Man’s failure to register to do business in Maryland.) Could the Dead Man board have fired Cabana for marrying a cop? Could a legitimate private employer (like the Coca-Cola Co.) have fired an executive for marrying an employee of its mortal adversary (like PepsiCo)? Read More ›
As we’ve covered here and here, the Supreme Court will decide this term whether a whistleblower can pursue a Sarbanes-Oxley claim for retaliation by a privately-owned employer. Jackie Lawson and Jonathan Zang, former employees of Fidelity investment advisory companies, say yes. The First Circuit said no.
Lawson and Zang have now filed their opening brief in their attempt to persuade the Supreme Court to disagree with the First Circuit and reinstate their claim. And they have even included a non-gratuitous George Clooney reference. (Hat tip to scotusblog.com for making this and numerous other Supreme Court resources available.)
Lawson and Zang’s argument involves the interpretation of 18 U.S.C. § 1514A, the provision of Sarbanes-Oxley that allows whistleblower claims. They argue that the plain language of Section 1514A applies to protect not only employees of publicly-traded companies and mutual funds, but also employees of contractors of those companies, such as the Fidelity investment advisers at issue in their case. The statute bars contractors from retaliating against an “employee”: Lawson and Zang contend that this should be read to refer to those contractors’ “own employees,” in addition to the employees of public companies with whom the contractors work. Br. at 15. They argue that it wouldn’t make any sense to only prohibit retaliation by contractors against others’ employees, since it would be very difficult, if not impossible, for a contractor to terminate someone else’s employee. Br. at 22. Read More ›
In federal courts across the country, employers have sought to limit the Dodd-Frank Act’s definition of “whistleblower.” Just last week, this challenge seemed futile. Both the SEC (in its regulations) and a number of federal district courts had rejected employers’ reading of the statute, under which the “whistleblower” term – and the accompanying right of action for retaliation – would be limited to those employees who reported misconduct to the SEC.
Last Wednesday, the Fifth Circuit flipped the script, holding that “the plain language of the Dodd-Frank whistleblower-protection provision creates a private cause of action only for individuals who provide information relating to a violation of the securities laws to the SEC.” Asadi v. GE Energy (USA), L.L.C., No. 12-20522 (5th Cir. Jul. 17, 2013), slip op. at 5. Read More ›
Here in the Baltimore-Washington area, we’re trapped under a dome - a heat dome. Like the inside of my car on these 100-degree days, disputes involving executives are also heating up, as the latest in Suits by Suits news shows:
- We’ve covered again and again the fact that district courts are broadly interpreting the Dodd-Frank whistleblower retaliation provision to include employees who don’t report misconduct to the SEC. The Fifth Circuit has now bucked that trend, in Asadi v. GE Energy (USA) LLC. We’ll cover this important development in depth next week.
- In close-to-home news, St. John Barned-Smith of the Montgomery Gazette writes that a Montgomery County, Maryland judge denied the Landon School’s request for summary judgment on a wrongful termination claim brought by its former chief operating officer. Timothy Harrison contends that Landon’s headmaster ignored his reports that supervisors were discriminating against Hispanic employees. According to the article, Harrison also complained about the headmaster’s annual $800,000 salary. (Thanks in advance for finishing this blog post instead of dropping everything and applying for headmaster jobs.)
- Viacom convinced Judge Sue Robinson of the U.S. District Court for the District of Delaware to throw out a shareholder lawsuit alleging that company directors improperly awarded tax-deductible bonuses. The July 16 opinion in Freedman v. Redstone, Civ. No. 12-1052-SLR, is here. But what Delaware giveth, it also taketh away: Viacom suffered a $300 million loss in the Delaware Supreme Court this week in a different shareholder dispute.
As we’ve previously covered here and here on Suits by Suits, a battle is raging in the federal courts over whether the new whistleblower protections in the Dodd-Frank Act of 2010 apply only to individuals who report misconduct to the SEC. But the fight, to this point, is as one-sided as Pickett’s Charge.
In a May 2013 decision, Judge Jesse Furman of the U.S. District Court for the Southern District of New York joined four other judges who have accepted employees’ expansive reading of the Act. Murray v. UBS Securities, LLC, No. 12-cv-5914 (May 21, 2013). Read More ›
2013 has been a banner year for followers of the Sarbanes-Oxley whistleblower protection provision, 18 U.S.C. § 1514A. As we’ve previously discussed on Suits by Suits, the Supreme Court will decide in its next term whether Sarbanes-Oxley protects employees of privately-owned corporations, in Lawson v. FMR, LLC. The Third Circuit also recently held, in Wiest v. Lynch, that an employee does not have to allege that he “definitively and specifically” reported a known legal violation in order to state a Sarbanes-Oxley claim.
Most recently, on Tuesday, the Tenth Circuit held that an employee is protected under Sarbanes-Oxley for reporting misconduct even when the misconduct does not involve a fraud against shareholders (Lockheed Martin Corp. v. Administrative Review Board, Department of Labor).
The facts of Lockheed involve tawdry letters, military affairs, and humiliation in the workplace. Read More ›
Only a handful of employment cases make it all the way to the Supreme Court’s august chambers at One First Street. That’s largely because the Court has discretion whether or not to review cases decided by lower courts of appeals. Thousands of unhappy litigants file petitions for writ of certiorari every year, asking for review from the highest court in the land. Almost all are turned away.
Tomorrow, the Court will consider whether to accept an appeal by Jonathan Zang and Jackie Lawson in a case that has significant implications for the Sarbanes-Oxley whistleblower protection provision, 18 U.S.C. § 1514A. Section 1514A, which was passed as a response to the Enron and other financial scandals of the early 2000s, prohibits public companies, as well as “any other officer, employee, contractor, subcontractor, or agent of such company,” from retaliating against “an employee” for protected activity. The issue in Zang and Lawson’s case is whether Section 1514A protects employees of privately-held companies, if those companies are working as contractors for public companies. Read More ›
In the first part of this series, we raised the question of whether a public employee’s rights under the First Amendment to the Constitution – primarily the right to speak freely on public issues – is limited by the fact that she works for the government. It’s the curious mix of the Constitutional rights we all enjoy, and the duty of the government to act as an employer when it hires and manages people to get things done. We looked briefly at how the Supreme Court addressed this issue: in short summary, public employees keep their rights to free speech on issues of public concern – but when they are speaking as part of their official duties, or their speech creates a disruptive atmosphere for the government agency, the employee can be fired for speaking out.
Two recent cases dealing with deputy attorneys-general illustrate this difficult intersection between public employment and speech. In both cases, the attorneys – a breed not known for silence – lost their jobs for speech: one for speaking out, and the other for refusing to speak when she was told to do so. Let’s see how their cases against their public employers are faring. Read More ›