The Inbox -- Three Day Weekend Edition (5/24/2013)
As we here at Suits by Suits get ready for a rare (but welcome!) three-day weekend, you might want to kick back, relax, and enjoy the week in disputes between executives and their employers. We'd say crack open a cold one for us as well, but given that it's before noon on a Friday and you're probably at work, that might not be the best advice we've ever given. On a related note: this blog does not provide legal advice or constitute an attorney-client relationship.
- Former Windsor Health Group CEO Michael Muchnicki has sued his former employer in federal court in Atlanta, seeking $2 million in severance pay and $3 million in punitive damages and attorneys' fees in connection with his termination in 2012. Muchnicki's lawsuit alleges that he was initially terminated "without cause" (which would have entitled him to approximately $2 million in severance pay and bonuses), but after he met with internal auditors, the company retaliated and changed his status to "terminated for cause," eliminating the severance pay.
- We believe that Facebook continues to pose some of the most interesting questions in employment law; and we've written about some of those issues here, here, here, here, and here. Today we've learned that the U.S. Court of Appeals for the Fourth Circuit has heard oral argument in a wrongful termination case as to whether clicking the "Like" button on Facebook constitutes protected freedom of speech for purposes of the First Amendment. We'll be sure to let you know what the 4th Circuit decides.
- As you may know, the Americans With Disabilities Act (ADA), 42 U.S.C. § 12101 et seq. requires certain employers, inter alia, to make "reasonable accommodations" for its otherwise-qualified employees with mental and physical disabilities; we've previously discussed how that can lead to lawsuits. This week, in an editorial in the Washington Times, Luke Rosiak argues that the revisions to the American Psychiatric Association's Diagnostic and Statistical Manual of Manual Disorders (the "DSM-V"), which sets forth the criteria for diagnosing and classifying mental disorders, could result in increased diagnoses of mental disabilities and disorders, which in turn could increase the number of lawsuits filed against employers pursuant to the ADA. The DSM-V is the first update to the APA's manual in thirteen years and includes updated criteria for mental disorders as well as recognizes new disorders that have been diagnosed by mental health professionals.
- Relatedly: BMO Harris Bank has agreed to a $400,000 settlement with fourteen of its former employees in connection with allegations brought by the EEOC pursuant to the ADA that BMO Harris had illegally terminated the employees after they had taken medical leave instead of provided reasonable accommodations that would have enabled them to return to work.
- And more in EEOC news, as the agency issued a press release announcing that it had filed suit against The Founders Pavilion, Inc., a New York-based nursing and rehabilitation center, on the grounds that the center had improperly asked prospective applicants and employees for family medical history in violation of the 2008 Genetic Information Nondiscrimination Act (GINA); this comes on the heels of a $50,000 settlement entered into by fabric distributor Fabricut that was also brought by the EEOC pursuant to GINA where an employer required prospective employees to turn over family medical history.
- We've previously analyzed the "say-on-pay" provisions of Dodd-Frank (and see also this Inbox item); this week, the Wall Street Journal's "Corporate Intelligence" column concluded that investors are "exercising more influence over executive pay," and highlights the perceived pros and cons from within the financial industry. Intriguingly, one finding is that despite cutting back on executive compensation and perks, the average shareholder may not see those efforts paying off in terms of the stock price. It's worth a read.
- An interesting twist on the usual suit by suit: Earlier this year, Asian Coast Development (Canada) Ltd., a developer currently constructing a luxury casino and resort in Vietnam ("Ho Tham Strip"), placed its CEO Lloyd Nathan on administrative leave, allegedly on the grounds that it was investigating potentially improper conduct on Nathan's part that could be grounds for termination. Now, Nathan has sued the developer's holding company, Harbinger Capital Partners, and others alleging that he was wrongfully forced out. The Complaint alleges: "To date, ACDL has provided Nathan no information about the basis of its supposed belief that grounds exist to terminate him for cause, no update as to the supposed investigation mentioned in the April 5 letter, and no further information about its plans regarding Nathan's employment with ACDL."
- Yesterday, a federal court jury ruled that former Commerce Bankcorp founder Vernon Hill was not entitled to the $17.2 million in severance pay, stock options, and accrued interest he sought in connection with his 2007 ouster after Commerce Bankcorp was acquired by TD Bank (and settled federal allegations that Hill had entered into real estate transactions that allegedly benefited his family).
- Of course, it's not just private-sector bonuses that are coming under fire. Last week, Inspector General Brian D. Miller issued a report criticizing the General Services Administration for handing out $160,000 in performance bonuses to various senior executives under its "Peer-2-Peer" awards program, which ran from 2009 to 2011. The report challenges the bases and methods by which the awards were given out; the Obama administration has responded that the program has been eliminated and that "bonuses are coming down to their lowest levels in five years."
- On the other hand, the Miami Herald reports that Miami city commissioners are considering a vote next week that would allow the outgoing city clerk, auditor, city attorney and city manager to return from retirement while still collecting six-figure pensions from the city.
- Finally, we'll end with a feel-good story involving the San Francisco Giants' pitcher, Jeremy Affeldt, a left-handed specialist who currently sports a fine 2.70 ERA pitching in relief for the first-place Giants. The New York Daily News dubbed Affeldt "the most honest athlete ever" after learning that he returned a $500,000 overpayment to the Giants in 2010. After agreeing to a $4 million deal, Affeldt learned that the signed contract mistakenly said "$4.5 million", and brought the error to the team's attention. Although Giants Assistant GM Bobby Evans concluded that Affeldt would have had the right to keep the mistakenly-awarded extra money, the reality isn't quite so clear. (The Giants would have had to have taken Affeldt to court and proven the mistake, and several practical considerations would have made that challenging -- but not impossible.) And in the end, Affeldt signed a 3-year, $18 million contract extension with the Giants this past offseason.