Supreme Court Considering Whether to Accept Sarbanes-Oxley Whistleblower Case

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 ›

Don’t Mess With The Lawyers (Or Other Public Employees), Part 2‎

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 ›

Rule #1: Don’t Mess With The Lawyers (Or Any Other Public-Sector Employees), Part 1

Some days when I look over the possible stories here, they’re filled with disputes between attorneys.  It almost makes me think that my fellow editors at Suits-by-Suits and me are the only attorneys that can get along.  Most of the time, at least. 

Because if you are, or have ever dealt with, Attornicus Americanus, then you know two things about our profession: 1) we don’t like to be told to be quiet when we have something important to say; and 2) even worse, though, is telling us we have to say something that we don’t want to say.  The two cases at issue in this two-part series feature lawyers working for the government who were in just those situations, and were fired.  We look at recent interesting developments in their claims for retaliation.  In passing, too, we’ll note what one of these lawyers was fired for saying, and what the other lawyer was fired for refusing to say. 

All in all, these are posts about whistleblowing and retaliation claims by public employees – and not just attorneys, either.  The public nature of the employment here is important because government employees keep some of their First Amendment rights to free speech when they go to work for the government.  The government employer, for its part, has some limited right to limit its employees’ speech in order to get its mission accomplished.  So before we turn to the two cases, a brief tour through the First Amendment rights of public employees is in order.  Read More ›

Why Didn't Rutgers Fire Basketball Coach Mike Rice for Cause?

Late last week, Rutgers announced that it reached a $475,000 settlement with former men’s basketball coach Mike Rice and that no cause for Rice’s termination would be provided.  Recently-publicized videotapes show Rice at practices hitting, kicking and throwing basketballs at his players and taunting them with obscenities and anti-gay slurs (not to be confused with this shocking video of Middle Delaware State women’s basketball coach Sheila Kelly throwing toasters at her players).  The announcement came more than two weeks after Rutgers President Robert Barchi told reporters that Rice was fired, but not for cause.  And that announcement came several months after Rice was suspended from work for three days, following an internal investigation by outside counsel, resulting in this report.  Read More ›

How Does That Burden of Proof Work Again? The Second Circuit’s Recent Sarbanes-Oxley Decision Explains

Earlier this month, we blogged about an important decision by the U.S. Court of Appeals for the Second Circuit in Bechtel v. Administrative Review Board, a Sarbanes-Oxley whistleblower case.  In Bechtel, thecourt upheld the Department of Labor’s denial of a whistleblower claim, even though it found that the administrative law judge (“ALJ”) had applied the wrong legal standard. 

So how did the ALJ get the law wrong?

To understand the ALJ’s error, it’s important to understand how the governing law defines the burden of proof in a Sarbanes-Oxley case.  Read More ›

Federal Court of Appeals Rejects Sarbanes-Oxley Whistleblower’s Challenge to Department of Labor Ruling

Based on the statistics, it is nearly impossible to win a whistleblower claim brought under the Sarbanes-Oxley Act.  In 2010, the Center for Public Integrity wrote that the U.S. Department of Labor, which administers those claims, had only upheld 25 out of the 1,091 claims brought since the Act was passed in 2002.  That’s only a 2% success rate. 

Although Scott Bechtel’s case took a longer path than most, it is now another statistic on the side of failure. Read More ›

Groupon CEO's Departure Memo: Watch What You Say, Even If You Say It Nicely

In Latin, it’s “Finis Coronat Opus”: the finish crowns the work.  It’s a reminder that when you’re leaving a job, it’s important to exit with the same grace, charm, and respect for your colleagues and the business’s stakeholders that helped get you the job in the first place.

You can also talk about Battletoads, which Groupon’s CEO Andrew Mason did in a memo he sent to the company’s employees last Friday, shortly after he was fired by Groupon’s board. 

You should, however, be careful what you say.  Read More ›

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.

Take A Close Look At That Employee Handbook...At Least In D.C.

Before you read this, go ahead and open your desk drawer.  Look beyond what may be some rather odd contents, and the fact that those contents may speak volumes about you.

Dig down and find the employee handbook that’s likely buried in there.  There’s a good chance you got this on your first day of work, put in in the drawer, and haven’t looked at it since.  But move those ketchup packets aside and pull it out, because the question for today is: does that book form a contract between you and your employer (or you and your employees, if you’re the owner of the business)? Read More ›

Montana Supreme Court Sends Employee On Arbitration Expedition

This week, our search for intriguing precedent has taken us all the way to the County of Lewis and Clark, Montana, and the case of Shannon Marsden. 

Marsden, an employee of Blue Cross Blue Shield Montana (“BCBSMT”), had an employment agreement with a clause that required arbitration of any dispute arising under it.  The agreement was for a two-year term, but provided that Marsden could be fired if the president of the company “believed that it would be in the best interest of BCBSMT.”

After BCBSMT terminated Marsden’s employment, she brought a claim under Montana’s Wrongful Discharge from Employment Act (“WDEA”), alleging that she was fired because she reported illegal rebates of insurance commissions. 

However, Marsden’s claim came with a catch. Read More ›