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- The Yates Memo’s Illusory “Extraordinary Circumstances” Exception
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Showing 6 posts in Fiduciary Duties.
In the case filed earlier this year in federal court in Virginia by spinal implant seller DePuy Synthes Sales, Inc. against two former employees and their current employer, DePuy’s competitor Sky Surgical, Inc., DePuy claims that Sky Surgical and the former employees conspired to breach the fiduciary duties that the former employees owed to DePuy by selling spinal implants to DePuy’s customers after they left DePuy. (DePuy also claims that Sky Surgical tortiously interfered with the former employees’ non-competes – the subject of our post on Tuesday.) We may think that quitting a company means quitting fiduciary duties, so that anything that the two former employees did after they left DePuy could not be breaching a duty to DePuy. But it’s not that simple. Not in Virginia, anyway. 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.
My kids love the game. We all know the rules: you only act if the caller says the words “Simon Says.” If those words don’t precede the command, then don’t move – or else.
The current lawsuit by Simon Property Group (“Simon”) shareholders in Delaware Chancery Court is kind of like a grown-up game of Simon Says, although in this version, the shareholders issue the commands, and Simon can’t act until they give permission.
The lawsuit involves Simon’s alleged promises that it would tie compensation to performance and that shareholders would have the opportunity to vote on material changes to compensation. After making those promises, Simon raised the pay of its CEO David Simon. (The CEO’s surname and the name of the company are no coincidence.) The Simon shareholders now claim that NYSE listing rules and Treasury regulations required the company to hold an investor vote before amending its stock incentive plan and granting David Simon a large stock award that was not based on performance.
When a dispute between executive and company reaches the point of litigation, usually the executive’s title begins with “former.” But not always. Sometimes litigation proceeds while the executive remains an officer or director of the company. How does the executive’s fiduciary duty to the company affect her litigation strategy and conduct? Read More ›
Virginia Is For... Plaintiffs? Virginia's Supreme Court Finds Managers, Supervisors May Be Personally Liable for Firing an Employee
On Thursday, a 4-3 majority of the Virginia Supreme Court held in VanBuren v. Grubb that individuals such as supervisors or managers could be sued as individuals and held personally liable for the common law tort of wrongful termination (also known as wrongful discharge) in addition to whatever corporate liability the employer may have.
As a practical matter, this gives plaintiffs and their lawyers additional leverage when bringing suits that contain a cause of action for wrongful termination in Virginia by being able to name the former employee’s boss as a co-defendant. From the boss's perspective, this decision means that you, personally, could be named as a defendant and ultimately forced to satisfy a judgment for improperly firing an employee from your own pockets -- not just your company's. It also means that employers and their executives who operate in Virginia need to review their D&O insurance coverage with this potential exposure in mind.
In short: whether you're an executive or an employer, you need to know about this case and its implications on the employment relationship. Read More ›
The world’s largest wind turbine company, Vestas Wind Systems A/S, recently terminated its former CFO’s severance agreement after it discovered that he entered into unauthorized deals in India. When Vestas announced its termination of its Henrik Noerremark’s severance agreement, it said that his unauthorized contracts cost the company about 18 million euros and that it is seeking to void the deals. The company said it was also considering whether to bring claims against Noerremark.
What kinds of claims might Vestas pursue? Read More ›