On Monday, AutoZone found itself on the wrong end of a $185 million verdict in favor of a former store manager, Rosario Juarez. Yes, you read that right. $185 million. This stunning verdict appears to have been the result of Juarez’s allegations of discrimination and retaliatory discharge, combined with an insider turned witness who provided extremely damaging testimony against the auto parts retailer.
In her complaint, Juarez alleged that AutoZone had a “glass ceiling” for women employees, which it kept in place through a hidden promotion process where open positions were not posted. According to Juarez, she succeeded in cracking the glass ceiling, securing a store manager position, but when she became pregnant, she was treated differently by her district manager. After giving birth, she complained about the unfair treatment and was soon demoted by the manager, who told her that she could not be a mother and handle her job. Later, she was terminated as the result of a loss prevention inquiry, in which she refused to participate in a “Q&A” statement about a theft at the store. Juarez alleged that the loss prevention department’s request for a statement was a pretext to fire her.
We’ve spent a lot of time on this blog discussing allegations of pregnancy discrimination like these (see, for example, here, here and here). The short of it is that a company can’t treat pregnant women, or women who have given birth, differently than it treats other employees. But we’ve never covered a verdict for pregnancy discrimination that looked more like a Powerball win than a litigation result.
If you find yourself in the digital dating scene (or the market for highly-valued start-ups for that matter), you are probably familiar with Tinder, the dating app that allows users to identify potential dates with an easy swipe of a finger on a smartphone. Last July, Whitney Wolfe, Tinder’s former VP of marketing, sued the company, alleging that she was sexually harassed by Tinder’s fellow co-founders, CMO Justin Mateen and CEO Sean Rad. The suit primarily focused on the ugly breakup between Mateen and Wolfe, and Mateen ultimately resigned in September, after Wolfe’s suit revealed his “private messages to [her] containing inappropriate content.” Now, the aftershocks of Wolfe’s suit have spread to impact Rad’s employment as well. As discussed in this lengthy Forbes piece, the company’s majority owner, IAC (InterActivCorp), decided to oust Rad as CEO early this month, in part due to his involvement in the Wolfe-Mateen brouhaha. IAC says it still wants Rad to stay involved and focus on Tinder’s business, so for now, it’s not undoing the “match” between Rad and the company he founded.
Consumers of taxi and black car services have witnessed a sea change in options over the past few years. Thanks to internet-based car-summoning applications, customers are empowered with a range of efficient, cost-conscious alternatives to standing on the corner, arms waving, eyeing every yellow vehicle that approaches. Now, Lyft, one of the leading entrants into this new market, is squabbling in court with an employee who left it to join the other market leader, Uber. According to Courthouse News Service, Lyft recently sued its former COO, Travis VanderZanden, alleging that he breached his employment contract when he left the company to become Uber’s new VP of international growth. Lyft says that VanderZanden stole 98,000 pages of confidential financial projections and forecasts, business strategies, marketing plans, and international growth documents. It also accuses VanderZanden of soliciting Lyft’s employees to join Uber, including Lyft’s former VP of operations. Meanwhile, just this week, Uber is rumored to be in talks with investors to raise significant capital toward international expansion. It seems obvious that Uber is focusing on growing its international market share, and perhaps time will tell if Lyft can prove a misappropriation of its own confidential international strategy.
Recently, in a government investigation by the civil division of a United States Attorney’s Office, an employee of a private company was deposed pursuant to a Civil Investigative Demand (CID). The employee, on the advice of counsel, refused to answer questions on certain topics and invoked the Fifth Amendment right against compulsory self-incrimination (she “took the Fifth” in common shorthand). Several days later, she was fired by her employer for taking the Fifth. (The employer claimed that it wanted to show cooperation with the government’s investigation and taking the Fifth is viewed as being non-cooperative.) When I recounted this story to my non-lawyer fiancée, he was outraged and wondered how could her employer do such a thing? Wasn’t this retaliation? Didn’t she have a clear wrongful termination claim against her employer? Good questions. While most, if not all, states (and the federal government) have enacted provisions to protect employees who blow the whistle on illegal activity from retaliatory discharge, is there any protection from discharge for an employee of a private company who chooses to keep mum to protect herself?
The short answer is no.
In our Bill of Rights, No. 5, it is written that “[n]o person … shall be compelled in any criminal case to be a witness against himself.” Although the text limits the right to stay silent in a criminal case, it is generally accepted that a witness may assert the right in any context in which the witness fears his/her statements may later be used against him/her. Thus, as an American I have the right to refuse to answer questions or offer information which I fear could incriminate me. [A full discussion of the scope of Fifth Amendment protection is beyond the scope of this post. To learn more about the Fifth Amendment protections against self-incrimination, I refer the reader to The Privilege of Silence, authored by my fellow Zuckerman Spaeder attorneys Steven M. Salky and Paul B. Hynes and available here.]
A whistleblower generally shouldn’t break the law in order to prove his claims. Indeed, the Whistleblowers Protection Blog says that this is a “basic rule,” and cautions that an employee who breaks the law while whistleblowing in order to get evidence will suffer from attacks on his credibility and may even be referred for criminal prosecution. However, the parameters of this rule aren’t always so easy to follow, as the Supreme Court heard last week in the case of Department of Homeland Security v. MacLean.
The MacLean case arose from a warning and text message. In July 2003, the Transportation Security Administration (TSA) warned MacLean, a former air marshal, and his colleagues about a potential plot to hijack U.S. airliners. Soon after, however, the TSA sent the marshals an unencrypted text message, canceling all missions on overnight flights from Las Vegas. MacLean was concerned about this reduction in security, and eventually told MSNBC about it. The TSA then issued an order stating that the text message was sensitive security information (SSI). When it found out that MacLean was the one who disclosed the message to MSNBC, it fired him.
MacLean didn’t take this while reclining; he challenged his dismissal before the Merit Systems Protection Board. But he lost. The Board decided that TSA didn’t violate the federal Whistleblower Protection Act by firing MacLean for his disclosure, because MacLean’s disclosure violated a TSA regulation that prohibited employees from publicly disclosing SSI.
When we first examined Wade Miquelon’s suit against his former employer, Walgreen, we didn’t have access to his complaint. Now we do. The complaint sheds more light on Miquelon’s allegations, helping to explain why they are causing a spiral of problems for the drug company.
As you may recall from our last article on the case, Miquelon alleges that Walgreen defamed him (in layman’s terms, lied) when it told the Wall Street Journal and investors that he had botched the earnings forecast for the 2014 fiscal year, and that his finance unit was “weak” with “lax controls.” According to Miquelon’s complaint, Walgreen executives made these negative statements for an entirely different reason: they had an “unchecked desire” to push Walgreen’s merger with Alliance Boots to completion. Miquelon alleges that an activist investor had threatened him for being “too conservative,” and that rather than standing up for him, the company’s CEO and its largest shareholder decided to disparage him in order to “deflect investor disappointment” and push through the merger.
Miquelon’s complaint is also somewhat of a public relations document, because it praises his work and goes into his interactions with the CEO and shareholder in great detail. It even says that Miquelon was next in line to be CEO (although the complaint also says he turned down that chance, instead deciding to move on). As to the allegedly botched earnings forecast, the complaint says that Miquelon recognized the problem well in advance of the call in which the company announced it was withdrawing its earnings goal. It also says that he was pressured at the same time by the company’s CEO to raise his estimate of earnings per share that would result from the Alliance Boots merger. The most explosive allegation on this front is that the CEO told him that he had “no choice” but to approve a $6.00 earnings per share estimate, rather than a lower one that would hurt the merger.
In honor of Halloween, we are looking over our shoulder at some of the most frightening news that we have brought to you this year on Suits by Suits:
The Supreme Court of Washington’s recent decision in Failla v. FixtureOne Corporation is noteworthy on two levels.
First, it involved the surprising claim by a salesperson, Kristine Failla, that the CEO of her employer (FixtureOne) was personally liable for failing to pay her sales commissions. Typically, if an employee had a claim for unpaid commissions, you’d expect the employee to assert that claim against her company, not the chief. But under the wage laws of the state of Washington, an employee has a cause of action against “[a]ny employer or officer, vice principal or agent of any employer ... who ... [w]ilfully and with intent to deprive the employee of any part of his or her wages, [pays] any employee a lower wage than the wage such employer is obligated to pay such employee by any statute, ordinance, or contract.”
Putting an imperious spin on a Woody Guthrie classic, I imagine Jimmy John’s singing, “This land is my land, this land is my land, from California to the New York island.” The sandwich giant has garnered a meaty amount of press (and congressional scrutiny) lately over the breadth of its non-compete agreements with its employees. The language, as written, would essentially prevent employees, from management down to the hourly sandwich builder, from seeking employment with a competitor for up to two years following the employee’s departure. The non-compete, although not universally utilized by Jimmy John’s franchisees, further defines a competitor as any business that derives more than 10% of its revenue from sandwiches, wraps, hoagies, etc., and is within a 3 mile radius of a Jimmy John’s location. According to HuffPost, Jimmy John’s has yet to enforce the clause against a minimum wage-earning sandwich maker or delivery truck driver, but The Atlantic’s CityLab map demonstrates the potential impact on the departing employee who might wish to make sandwiches elsewhere.
Comcast may have found an enemy for life in a former cable-subscribing customer. Comcast recently received a novel form of public scrutiny when Conal O’Rourke, a PWC accountant, accused it of causing his termination from PricewaterhouseCoopers. O’Rourke alleged in a complaint filed in California federal court that Comcast’s Controller, Lawrence Salva, contacted a PWC principal, alleging that O’Rourke invoked his position at the accounting firm to gain leverage in his ongoing arguments with Comcast over billing issues and equipment charges. According to Bloomberg, the Philadelphia office of PWC billed Comcast around $30 million for its accounting services, thereby giving Comcast leverage to potentially request the action from PWC. PWC, in its defense, claimed that O’Rourke was fired for violating company policy covering employee conduct. O’Rourke allegedly accused Comcast of questionable accounting practices during his (what I am sure were “spirited”) telephone exchanges with Comcast customer service representatives.
Today, we discuss taxes – specifically, the taxation of severance payments. It has long been recognized that severance payments are “income” to an employee, and that employers must withhold federal income taxes from the payments. Earlier this year, the Supreme Court made clear that severance payments also are “wages” subject to FICA taxes, and that an employer must withhold FICA taxes as well. The case, United States v. Quality Stores, 134 S. Ct. 1395 (2014), resolved a split among two federal appellate courts that had led many employers to seek a refund of the employer share of FICA taxes paid to the IRS on severance payments.
FICA is the federal payroll tax on wages that funds Social Security and Medicare. The tax is paid by both employers and employees. Each pays 7.65% on the first $106,800 of the employee’s annual wages and then 1.45% on amounts exceeding that threshold. Employees never see their share of the tax – employers are required to withhold and pay the employee’s share to the IRS.
In the 2008 case of CSX Corporation v. United States, 518 F.3d 1328, the Federal Circuit agreed with the IRS that a form of severance called supplemental unemployment compensation benefits (or SUB payments) falls within the broad definition of “wages” subject to FICA taxes. But several years later in Quality Stores, the Sixth Circuit reached the opposite conclusion, holding that SUB payments are not wages subject to FICA taxes. 693 F.3d 605 (2012). The court reasoned that because section 3402(o)(1) of the Internal Revenue Code states that SUB payments shall be treated “as if” they are wages for income-tax withholding, they are not in fact wages.
The news hasn’t been great for Walgreen Co. over the past couple of months. According to the Wall Street Journal, in early July, chief financial officer Wade Miquelon slashed his forecast for pharmacy unit earnings to $7.4 billion from $8.5 billion. Miquelon left the company in early August. Shortly thereafter, the Journal ran an article stating that Miquelon’s “billion-dollar forecasting error” had cost Miquelon his job and alarmed Walgreen’s big investors.
Now, Walgreen is fighting a battle on another front – against Miquelon. Last week, Miquelon sued Walgreen in state court in Illinois, alleging that the company, its CEO, and its largest shareholder had defamed him. According to Miquelon, the company’s big investors were told that Walgreen’s finance department was “weak” and had “lax controls.”
The four things that a defamation plaintiff must typically prove to prevail are: (1) the defendant made a false statement about him; (2) the statement was published, i.e., made, to one or more other persons; (3) the defendant was at least negligent in making the statement; and (4) the publication damaged the plaintiff. Thus, if Walgreen and the other defendants can show that any harmful statements they made about Miquelon were true, they stand a good chance of defeating his claims. On the other hand, as we covered in this article, if Miquelon can prove that the defendants engaged in a “premeditated scheme” to do him harm by falsely criticizing his performance, he might be able to recover a substantial verdict.
A bankruptcy can be hazardous to the health of an executive’s bonus check. Sometimes, however, an executive can survive an attack on a bonus in a bankruptcy, and come out clean on the other side. For example, we covered here how one executive succeeded in keeping most of his incentive payments based on the timing of those payments.
Now, we have another lesson in how executives can keep their bonus checks despite a bankruptcy, from Judge Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware. The company at issue in the case was Energy Future Holdings Corp. (EFH), a holding company with a portfolio of Texas electricity retailers. EFH filed for Chapter 11 bankruptcy in April of this year.
Last week, a Texas state court issued a whopping judgment in favor of a former employee of FE Services LLC. The case stemmed from an employment agreement between the founder of FE Services, doing business as Foxxe Energy, and a friend he enlisted to join the company. Founder James Stewart induced his friend, Marc Jan Levesconte, to work for the company with the promise of a significant cut of any future sale. Levesconte was terminated on the eve of the company’s $52 million acquisition by Ensign Services LLC. According to Law 360, Levesconte brought a breach of contract suit two years ago. Now, the court has decided that Ensign and Stewart owe him $16 million. You may recall the famous scene from There Will Be Blood where energy magnate Daniel Plainview taunts Eli with the milkshake metaphor (“I drink your milkshake!) and revels in his dominance of the oil-rich land. If Stewart drank Levesconte's milkshake, his (presumably) former friend Levesconte is now sipping from his own end of the straw.
As the term implies, a “trade secret” normally describes information kept confidential to prevent unfair competitive advantage. Is it possible that information housed on social media could also be protected as a trade secret? A California federal court will hold a trial on this novel question in Cellular Accessories For Less, Inc. v. Trinitas, LLC, No. CV 12-06736 DDP. The National Law Review discusses the suit in which Cellular Accessories sued a former employee, David Oakes, alleging breach of contract. Oakes, upon his departure, emailed himself a list of business contacts and other supporting information, and ultimately founded his own competing business, named Trinitas. He continued to maintain his same business contacts on his LinkedIn profile. During his employment with Cellular Accessories, however, Oakes had signed an employment agreement and a statement of confidentiality which forbade the transfer of proprietary information, including the company's customer base. The confidentiality agreement further forbade the use or disclosure of such proprietary information. The company sued him for trade secret misappropriation under the California Uniform Trade Secrets Act and for breach of contract. Whether information is a trade secret under California law depends on whether the information is easily ascertained or otherwise available to the public. In this case, the court said, the parties hadn't given it enough detail to decide whether Oakes's contact list was actually available to everyone else who contacted him, and whether Oakes had control over the public availability of that list. Therefore, the court couldn't resolve the trade secrets issue on summary judgment (although it could resolve the breach of contract claim because Cellular Accessories had not established a loss). Perhaps equally interesting is the question of who owns the LinkedIn account. Can a trade secret belonging to Cellular Accessories exist in a public form essentially owned by the employee? We will keep you updated as the drama unfolds.
For my first foray into blog-writing, allow me to tell a cautionary tale intersecting two of my favorite topics: defending companies and individuals in government investigations and Directors and Officers (D&O) Liability Coverage. As a contract junkie who enjoys reading, interpreting, and arguing contract language, parsing through various interrelated D&O policy provisions to glean favorable language for my white collar clients offers hours of amusement (lest ye be worried about me, I do have other hobbies). D&O policies can be effectively used to defray defense costs incurred due to a government investigation. The trick is keeping the money.
The recent suit between Protection Strategies, Inc. (PSI) and Starr Indemnity & Liability Co. in the Eastern District of Virginia, case 1:13-cv-00763-LO-IDD, illustrates how difficult keeping the money can be. PSI is an Arlington, Va.-based defense contractor. In January 2012, PSI received a subpoena from the NASA Office of the Inspector General and a search warrant issued by the United States District Court for the Eastern District of Virginia. On February 1, 2012, the NASA OIG executed the search warrant at PSI’s headquarters. In addition to the company itself, several of PSI’s current and former officers were informed that they were also targets of the NASA OIG investigation. PSI retained Dickstein Shapiro to represent it and hired separate counsel to represent the individual targets and other company employees.
Fire consumes all – including, perhaps, one CEO’s chance of winning his lawsuit. Because G. Wesley Blankenship burned relevant evidence, the jury in his case will now be told that it should assume the lost documents were bad for him.
Blankenship left his job as CEO of Security Controls, Inc. in early 2012. He soon decided to put even more distance between himself and his employer by having a bonfire. Into the flames went Blankenship’s laptop and his SCI paper files.
This turned out to be a bad choice when Blankenship sued SCI and its directors in mid-2012, alleging that they weren’t giving him proper value for his shares in the company. Blankenship’s lawyers eventually informed SCI of the fire, and SCI moved for sanctions, arguing that Blankenship had knowingly “spoliated” – i.e., destroyed – relevant evidence. As we’ve previously discussed in this post, spoliation can have serious consequences for litigants. Among these consequences are jury instructions that allow jurors to assume that the destroyed documents were detrimental to the party’s case.
Most law students spend several weeks in a first-year contracts class studying the concept of consideration. Consideration, in essence, is what a contracting party receives in exchange for promising to do something. A promise without consideration is not an enforceable contract. If A promises to wash B’s car next Tuesday and fails to do so, B cannot sue A on Wednesday, because A’s promise lacked consideration. But if A promises to wash B’s car and B promises to give A $20, or $1, or a glass of water, the promise is enforceable and B can sue if A fails to perform. Courts generally do not examine the adequacy of consideration, only its existence.
Because consideration can be minimal, many lawyers forget about it after that first year of law school. But it remains a necessary element of most contracts, and it recently arose in a peculiar way in a Connecticut case involving a dispute over an employment contract. See Thoma v. Oxford Performance Materials, Inc., 153 Conn. App. 50 (2014).
The plaintiff in the case, Lynne Thoma, was an employee of a manufacturing company. During her employment the company obtained new financing, and the investor insisted that Ms. Thoma enter into an employment agreement. This “first agreement” gave Ms. Thoma a fixed salary plus benefits for a 24-month period with automatic 12-month renewals. The company could fire her without cause on 60 days’ notice, but it would then be obligated to pay her salary for the remainder of the term plus six months. The first agreement also included a noncompete provision for the period of Ms. Thoma’s employment plus six months thereafter.
The company almost immediately decided it did not like certain terms of the first agreement and it required Ms. Thoma to enter a second agreement, which by its terms stated that it superseded any prior agreements. The second agreement did not discuss salary or severance, but it expressly stated that Ms. Thoma was an at-will employee. It also included a noncompete provision with apparently inconsistent terms: one section stated that she would not compete “during the period of her employment” and the other said that if she was terminated she would “continue to comply” with the noncompete provision.
The company fired Ms. Thoma about 16 months after the parties executed these agreements. Ms. Thoma sued, claiming that the company breached the first agreement by firing her without notice before her term ended and by failing to pay severance. The company claimed that the second agreement allowed it to fire her without notice at any time and did not require severance payments. But the trial court found, and the appellate court agreed, that the second agreement was not enforceable because it lacked consideration.
If executives lie and fudge credentials on their resumes, they may find their pantsuits on fire when falsehoods are discovered. For example, the Wall Street Journal recently reported that David Tovar, a top Wal-Mart spokesperson, was terminated recently when a bogus credential was discovered through the company’s promotion-vetting process. According to the Journal, liars and resume-fakers should beware of embellishing their credentials given the increased digitization of transcripts and diplomas. A company named Parchment, for example, houses these credentials in a secure database, allowing employers and employees to substantiate resume claims. Additionally, Pearson PLC has developed a digital platform whereby recipients of licenses and certifications can post “badges” to their profiles on websites like LinkedIn. It’s all in an effort to keep everyone honest, especially those who need a little nudging in that direction.
The University of Detroit Mercy’s Titans athletic department has seen its share of controversy stemming from a lawsuit filed by former assistant basketball coach, Carlos Briggs. According to The Varsity News, Briggs claimed he was terminated for blowing the whistle on an affair between the athletic director and another assistant coach. A federal judge dismissed the case, asserting that no recognized cause of action arose from his colleagues’ extramarital relationship. Briggs is appealing with the hopes that an oral argument on the merits will give weight to his claims.
On September 22, the Securities and Exchange Commission announced its largest award to date under its whistleblower program: $30 million. The SEC said that the whistleblower, who lives in a foreign country, came to it with valuable information about a “difficult to detect” fraud.
In the order determining the award (which is heavily redacted to protect the identity of the whistleblower), the SEC commented that the claimant’s “delay in reporting the violations” was “unreasonable.” In arguing for a higher bounty, the claimant contended that he or she was “uncertain whether the Commission would in fact take action.” This argument, however, didn’t support a “lengthy reporting delay while investors continued to suffer losses.”
Every once in a while published legal opinions and pop culture intersect in such a cheeky, unexpected way as to cause minor ripples in the otherwise relatively calm waters of legal writing and reporting. In what some have described as the footnote of the year according to Business Insider, a Texas Supreme Court Justice gave a wink and nod to a Coen Brothers’ favorite, The Big Lebowski, in a recent opinion. The events in the underlying case might not have been as convoluted as The Big Lebowski’s plot, but it is worth noting. The appellant, Robert Kinney, was a legal recruiter for BCG Attorney Search until 2004 when he left to create his own firm. Some years later, Andrew Barnes, President of BCG, claimed that Kinney engaged in a kickback scheme while an employee of BCG. Kinney then sued Barnes, accusing him of defamation and asking for permanent injunctive relief. The trial court granted (and the appeals court affirmed) summary judgment, agreeing with Barnes that a permanent injunction would constitute impermissible prior restraint of free speech. Now in the hands of the Texas Supreme Court and Justice Debra Lehrmann, the high court ultimately agreed with the finding. As Justice Lehrmann dove into First Amendment law and jurisprudence in the opinion, she noted:
Last week, we covered the Third Circuit’s decision that Goldman Sachs bylaws didn’t clearly establish a vice president’s right to advancement of his legal fees for his criminal travails. The vice president, software programmer Sergey Aleynikov, isn’t giving up easily, however.
Law360 reports that Aleynikov has filed a petition for panel rehearing or rehearing en banc. In the federal appellate courts, this is a step that parties can take when they disagree with the decision of the three-judge panel that heard their case. In a panel rehearing, the panel can revisit and vacate its original decision; in a rehearing en banc, the entire Third Circuit could consider the issue.
Aleynikov contends in his petition that the panel misapplied a doctrine of contractual interpretation called contra proferentem. In plain English, contra proferentem means that a court will read the written words of a contract against the party that drafted it. The panel in Aleynikov’s case disagreed as to whether under Delaware law (which governs his dispute), the doctrine can be used to determine whether a person has any rights under a contract. The two-judge majority said that it can’t, and therefore refused to use the doctrine when it decided whether Aleynikov – as a Goldman vice-president – fell within the definition of an “officer” entitled to advancement under the company’s bylaws. In dissent, Judge Fuentes asserted that “Delaware has never suggested that there is an exception to its contra proferentem rule where the ambiguity concerns whether a plaintiff is a party to or beneficiary of a contract.”
In his petition, Aleynikov asks the whole Third Circuit to decide who is right: Judge Fuentes or the majority. He also cites additional Delaware cases that he says support his position, including one “unreported case” that was brought to his counsel’s attention “unbidden by a member of the Delaware bar who read an article commenting on the panel’s decision in The New York Times on Sunday, September 7, 2014.” Sometimes, to establish a right to advancement rights, it takes a village.
The court of public opinion giveth, and taketh away. You may recall that we reported on the reinstatement of Arthur T. Demoulis as Market Basket’s CEO, following weeks of customer and employee advocacy for the chief. Public opinion, in the case of Desmond Hague, cut the other way in unrelenting fashion. Mr. Hague, president and chief executive of Centerplate, a catering company servicing sports and entertainment venues, was captured on video kicking and abusing an otherwise docile Doberman Pinscher puppy. The Washington Post reports that when the footage made its way to the SPCA of British Columbia, it quickly went viral and users of social media demanded his resignation. Initially, Centerplate dismissed the incident as a personal matter. As media attention increased, Centerplate announced that Mr. Hague would undergo counseling and community service. The masses remained unimpressed, and as the pressure mounted, Mr. Hague was ultimately removed from his position. Given the power of social media, it appears that the court of public opinion has rendered its verdict.
The National Law Review, citing the recent lawsuit filed by TrialGraphix Inc. against its competitor FTI Consulting, Inc. in the New York Supreme Court, offered helpful tips to employers on both sides of the battle over poached employees. In this case, four high-ranking employees conspicuously left TrialGraphix for FTI Consulting. As in similar suits filed by Booz Allen and Arthur J Gallagher Co. (which we discussed here), claims of corporate poaching usually involve claims of trade secret theft and interference with client business relationships. The article highlights the importance of clearly-worded, reasonably-framed restrictive covenant agreements, safeguarding data upon the employee’s departure, and requiring employees to formally acknowledge the return of all company proprietary information and devices. Similarly, employers seeking to hire these employees should review any non-compete agreements to ensure compliance while also requiring the employee to refrain from using the previous employer’s confidential information or trade secrets. Non-disparagement agreements can also go a long way to prevent ill will between the old and the new employers.
We cover a broad range of issues that arise in employment disputes. Occasionally, we also spotlight other topics of relevant legal interest, ranging from health care to white-collar defense to sports, just to keep things interesting.
Led by Jason Knott and Andrew Goldfarb, and featuring attorneys with deep knowledge and expertise in their fields, Suits by Suits seeks to engage its readers on these relevant and often complicated topics. Comments and special requests are welcome and invited. Before reading, please view the disclaimer.