Suits by Suits

The coronavirus pandemic has already had a massive impact on businesses. Many companies have announced layoffs, furloughs, or unpaid leaves of absence. 

Employers aren’t prohibited from firing employees. Employment relationships are usually at-will, meaning that employees can be fired for any reason or no reason at all. Of course, there are still boundaries that apply, such as laws prohibiting discrimination and retaliation.

The recent coronavirus outbreak raises a host of employment-law issues. For example, the Occupational Safety and Health Act requires employers to take measures to eliminate or reduce dangerous hazards to their employees. The Family and Medical Leave Act mandates leave for “serious health conditions,” raising questions as to whether an infected employee is legally entitled to leave. And Title VII of the Civil Rights Act prohibits discrimination based on national origin, so an employer can’t tell someone not to come to work just because he or she is from China or Italy.

Many employers strongly prefer arbitration to litigating with their employees in court. Employers often believe—and the Supreme Court has agreed—that arbitration of employment disputes has many benefits, including potential cost savings, more limited discovery, a greater ability to keep the dispute confidential, and speedier resolutions.

Can a news organization avoid a discrimination claim by arguing that it was exercising its First Amendment right to choose who writes the news?

That’s the question that the California courts have been grappling with in Stanley Wilson’s case against CNN. And that question has now been answered in Wilson’s favor. 

Under the National Labor Relations Act (NLRA), employees have a right of collective action, and employers are prohibited from interfering with that right. But these provisions can conflict with an employer’s desire and ability to regulate conduct in the workplace. 

One such conflict arises when employers conduct internal investigations. Employers may want to keep those investigations confidential, so that employees do not spread information about them through the workplace or coordinate their responses.

As readers of this blog know, corporate executives (and regular employees) are often subject to non-competes in their employment agreements, as well as other provisions designed to ensure that if they leave their job, they will not be able to work for a competitor for some period of time.  By contrast, law firms are ethically prohibited from imposing such restrictive covenants on their attorneys.  The justification for this exceptionalism is the premise that clients have the right to choose their counsel and any restrictions on a lawyer’s right to practice could impede that choice.  (Of course, why client choice is more imperative in an attorney/client relationship than other professional relationships of trust has always been a bit vague.)

In our last post, we analyzed the complaint that Jones Day ex-associates Julia Sheketoff and Marc Savignac filed against the firm. Sheketoff and Savignac, a married couple, allege that the firm discriminated against them and retaliated against Mark when he complained. They focus on the firm’s parental leave policy, under which new birth mothers receive 18 weeks of paid leave but new fathers receive 10 weeks. 

Battle has now been joined in the lawsuit. Jones Day moved to dismiss, and the motion is now fully briefed with an opposition, reply, and even a proposed surreply.

On Tuesday, married couple Julia Sheketoff and Mark Savignac filed an attention-grabbing lawsuit against their former law firm, Jones Day, for gender discrimination and retaliation. Jones Day is one of the largest law firms in the United States, and was the subject of a lawsuit filed earlier this year by female lawyers alleging a “fraternity culture.” 
 
According to their complaint, Sheketoff and Savignac each clerked for Justice Stephen Breyer, and then joined Jones Day’s prestigious Issues & Appeals practice as associates. They eventually each received half-million-dollar salaries. But all was not well.

Last week, President Trump made headlines when he tweeted that “‘progressive’ Democrat Congresswomen … originally came from countries” that were “totally broken and crime infested,” and that they should “go back” to the “places from which they came.” (Three of the Members he was referencing were born in the U.S., and one is a naturalized U.S. citizen. All are women of color.)

This is an employment law blog, so naturally, President Trump’s tweet raised our antenna on an employment law issue: can telling someone to go back to the country they came from constitute prohibited discrimination or harassment?

Even employers who are devoted to higher callings can find themselves in worldly disputes with former employees over access to emails and computer files.

For example, the National Institute for Newman Studies is devoted to researching Cardinal John Henry Newman, who will be canonized later this year. While awaiting Newman’s ascent to sainthood, however, the Institute has been dealing with a mundane problem: a lawsuit brought by its former executive director, Robert Christie.

A class action allows a plaintiff to sue not only on his own behalf, but also on behalf of others similarly affected by a defendant’s misconduct. In the employment context, for example, plaintiffs can bring class actions against employers for violations of labor codes, wage and hour laws, and discrimination laws.

Under the Family Medical Leave Act (“FMLA”), employers are required to provide 12 weeks of unpaid leave to employees with certain family or medical issues. These issues include attending to serious health conditions that make the employee unable to work, or caring for newborns or family members. 

A frequent dilemma that employers often face is what to do when an employee has exhausted all available FMLA leave and still cannot return to work. One employer, Gold Medal Bakery, currently finds itself in litigation surrounding this issue.

Companies zealously guard their trade secrets and other information that gives them a competitive edge. And as we’ve covered in prior posts, companies often resort to the courts to protect this kind of information.

Recently, a media company filed a lawsuit seeking to use trade secret protections to recover something very public—a reporter’s Twitter account.

This post deals with two related protections that state laws and companies provide for directors and officers—indemnification and advancement. Corporations usually commit to indemnify officers and directors (and sometimes employees) when, because of their connection to the company, they are pulled into legal proceedings. Corporation also usually agree to advancement - paying legal fees and costs in advance of a final determination about the individual’s right to indemnification - so that officers and directors don’t have to foot the legal bills themselves while such a matter is going on. 

On May 29, Roseanne Barr posted a tweet comparing former Obama adviser Valerie Jarrett to an ape. ABC’s reaction was swift and decisive: it fired Barr and cancelled her show.

ABC’s decision led to pontification from various pundits and Twitter personalities arguing that Barr’s “humor” was somehow “free speech” protected by the First Amendment. 

But even if Barr was exercising free speech when she posted her tweets, that has no bearing on ABC’s lawful right to fire her. ABC is a private employer, not the government, so the First Amendment did not prevent it from taking action based on employee speech.

Companies and individuals frequently enter into arbitration agreements requiring that claims be brought before a private arbitrator, rather than a judge and jury. Arbitration has various benefits: it can provide quicker resolutions, reduced costs, the right to participate in the selection of the arbitrator, and arbitral expertise. In addition, some parties prefer arbitration because it offers a cloak of confidentiality that does not exist in the state and federal courts.

Phishing. Spoofing.

These words may sound silly, but for employers, they are anything but.

Phishing is the attempt to obtain sensitive electronic information—such as usernames, passwords, or financial information—under false pretenses. Often, when bad actors engage in phishing, they use email spoofing—sending emails that appear legitimate but are anything but. These emails can dupe users into disclosing confidential personal or company information.
 

When an employer changes its contract with an employee, the change should be communicated clearly—and preferably, in writing. Otherwise, the employer may be at risk of finding that the old terms still control.

For example, last week in Balding v. Sunbelt Steel Texas, Inc., No. 16-4095 (10th Cir. Mar. 13, 2018), a federal court of appeals ruled that an employer had to go to trial over a salesman’s claim for unpaid commissions. 

Tell the Securities and Exchange Commission (SEC). That’s the message the United States Supreme Court sent to whistleblowers with its decision yesterday in Digital Realty Trust, Inc. v. Somers.

As we previously covered here, the Digital Realty case involved a key issue under the Dodd-Frank Act’s anti-retaliation provision: does the provision apply to a whistleblower who reported internally, but did not provide information to the SEC?

Companies want to attract talented leadership, and protections for officers and directors against lawsuits can be part of the total package.

This is one reason why many businesses incorporate in Delaware—Delaware law provides significant assistance to officers and directors who are named in legal proceedings connected to their corporate role. Delaware courts don’t hesitate to uphold this protection when circumstances warrant. And in Horne v. OptimisCorp, the Delaware courts again vindicated an officer’s broad rights to indemnification under Delaware law.