A few days before Alex Rodriguez filed his Complaint against Major League Baseball (and, somewhat surprisingly, the Major League Baseball Players Association, his own union), we set out the basic legal framework that will govern A-Rod’s efforts to overturn the arbitration award suspending him for the entire 2014 season.  Now, I’m a baseball lawyer, so obviously I had a unique interest in this particular case, but I also continue to think that the A-Rod case is instructive in the larger context that we write about here at Suits by Suits.

Specifically, A-Rod isn’t just one of the most famous – or infamous, depending on your perspective – baseball players in the world; he’s an employee having a very well-publicized dispute with his employers.  The law that governs A-Rod’s attempts to vacate Fredric Horowitz’s arbitration award is the exact same law that would apply to virtually any private sector employee whose employment-related dispute is governed by arbitration; namely, the Federal Arbitration Act, 9 U.S.C. § 1 et seq.

So, what does A-Rod’s complaint have to teach us as employers or employees?  One thing it can do is to emphasize the importance of reading a complaint backwards.  Read on to discover why.

• Breach of Contract
• Civil Litigation

In Part 1 of this post, we looked at a heated executive employment dispute that is being tried in Dallas.  The case involves a former hedge fund executive, sued by his former employer for allegedly not returning 59,000 confidential documents when he resigned and for trying to poach the firm’s clients.  The Dallas Morning News has full coverage here and here. 

The trial is forcing both sides to air things about the other – and themselves – that they would likely not want raised in a public forum.  In Part 1, for example, we noted how Highland executives testified that a compensation program had to be stopped after the executive, Daugherty, left the firm, because (as the Dallas Morning News put it) Daugherty “engaged in conflict of interest transactions” for the compensation program.  Surely Highland would rather not have raised that issue publicly.  But that’s what aggressive litigation sometimes forces parties to have to do to win their case – which is the cautionary tale of the Highland v. Daugherty trial.  

• Breach of Contract
• Civil Litigation
• Defamation
• Severance Agreements

Many of the executive employment disputes we write about focus on one or two key issues – the enforcement of a non-compete clause in an employment agreement, for instance, or the odd ways a severance package can work. 

A case being heard in Dallas, however, brings together a whole set of executive-employment-related problems in one place: alleged defamation, corporate confidential information allegedly not returned by a departing executive in breach of a written employment agreement, compensation demands and agreements that were never put in writing, and an executive’s desire to work part-time from home.  Throw in alleged self-dealing and conflict of interest allegations against the executive – who ran a specialty investment team at the employer, a large hedge fund – and you have the sort of intense, angry dispute that used to be featured on a soap opera set in Dallas that captivated the nation in the 1980s. 

Without, of course, the famous shower scene.  

• Breach of Contract
• Civil Litigation
• Defamation
• Severance Agreements

No, this headline is not a pun about the closed on-ramps to the George Washington Bridge.  Rather, it’s meant to acknowledge that as the New Year gets into full swing, folks are starting to ramp up their analysis of ongoing issues in disputes that involve executives and their employers.  We’ve seen a number of interesting stories and summaries cross our desk:

• Ben James of Law360 published a thorough recap of the lingering questions about Dodd-Frank’s whistleblower protections.  We’ve got one more question: will the Supreme Court’s upcoming decision in Lawson v. FMR LLC (we covered the oral argument here) affect a whistleblower’s choice between initially pursuing a Dodd-Frank claim in federal court, or filing a Sarbanes-Oxley claim with the Department of Labor?  Right now, some courts are putting a narrow construction on who can sue under Dodd-Frank, so if the Lawson Court takes an expansive view of Sarbanes-Oxley, it may give new life to that statute as an appealing option for whistleblowers.

• What’s not ramping up: romance in the home of the new president of Alabama State University.  Debra Cassins Weiss of ABA Journal reports that Gwendolyn Boyd, who is single, will not be allowed to “cohabit with a romantic partner in the university residence so long as she is single,” according to her employment contract.  Boyd says she has “no issue” with the provision.  Sorry, suitors.  (Which, by the way, would be a good name for our group of loyal readers.)

• Breach of Contract
• Civil Litigation
• Executive Compensation
• The Inbox

Ashwin Dandekar and Emily Hua live in California.  They worked for Campbell Alliance, a biopharma consulting group, in California.  Yet when Campbell Alliance sued Dandekar and Hua for violating their noncompete and confidentiality agreements, it sued them in federal court in North Carolina.  And the judge in New Bern has now denied the employees’ bid to send the case back to California, meaning they will have to litigate 3,000 miles away from home.  Campbell Alliance Group, Inc. v. Dandekar, No. 5:13-CV-00415-FL (Jan. 3, 2014).  What gives?

A forum selection clause, that’s what.  Typically, in federal court, a court has the discretion to transfer a case to any other district where it “might [otherwise] have been brought,” in order to serve “the convenience of the parties [and] the interest of justice.”  28 U.S.C. § 1404(a).  In making the transfer decision, courts consider the plaintiff’s choice of forum, the residence of the parties, the convenience of parties and witnesses, and other factors that involve whether it’s easier and makes more sense to litigate a case in one location over another.  But when there’s a forum selection clause – i.e., a provision in a contract that says a lawsuit over it shall be brought in a particular state – that clause can be a significant factor in the transfer analysis.  Indeed, in a decision one month ago, the Supreme Court confirmed that forum-selection clauses should typically decide the issue of which federal court should hear a case.  Atlantic Marine Construction Co. v. U.S. Dist. Ct. for the Dist. of Texas, No. 12-929 (Dec. 3, 2013).

• Breach of Contract
• Noncompete Agreements ‎

If you’re following our coverage of the Alex Rodriguez story at all (See our Part 1, a general primer; and Part 2 on the specifics of the 162-game suspension), you probably watched last night’s 60 Minutes, which contained interviews with Tony Bosch of Biogenesis, who claims that he personally administered banned Performance Enhancing Substances to Alex Rodriguez; MLB executive Rob Manfred; and one of Alex Rodriguez’s attorneys, Joseph Tacopina, Esq.

Concurrent with the airing of the program, sports journalists began reporting that the Major League Baseball Players Association (“MLBPA,” the players’ union) was “furious” at MLB’s participation in the TV program.  The MLBPA subsequently issued the following statement:

MLB's post-decision rush to the media is inconsistent with our collectively-bargained arbitration process, in general, as well as the confidentiality and credibility of the Joint Drug Agreement, in particular.  After learning of tonight's "60 Minutes" segment, Players have expressed anger over, among other things, MLB's inability to let the result of yesterday's decision speak for itself.  As a result, the Players Association is considering all legal options available to remedy any breaches committed by MLB.

Let’s evaluate those two arguments.

• Arbitration
• Breach of Contract

This past holiday week, many moviegoers took in The Wolf of Wall Street, which is the latest glamorization of Wall Street misdeeds to hit the big screen.  Of course, the most famous moment from a financial flick is still Gordon Gekko’s “Greed is good” speech in 1987’s Wall Street.

Greed isn’t always good, as Joseph F. “Skip” Skowron III, a former portfolio manager for Morgan Stanley, could probably tell you.   Skowron’s admitted misconduct has cost him not only his freedom, but also $31,067,356.76 that he must pay back to his employer.  Morgan Stanley v. Skowron, No. 12 Civ. 8016(SAS), 2013 WL 6704884 (S.D.N.Y. Dec. 19, 2013).

The big judgment arises from Skowron’s August 2011 plea agreement with the government, in which he admitted that he participated in a three-year insider trading conspiracy.  As news reports described, Skowron used insider tips from a French doctor to avoid losses in hedge funds he managed, and then lied to the SEC about the tips.  The judge in Skowron’s criminal case sentenced him to five years in jail, and ordered him to pay restitution to Morgan Stanley of 20% of his compensation over the time of the conspiracy. 

Morgan Stanley then sued him to recoup the rest.  In that lawsuit, it moved for summary judgment based on New York’s “faithless servant” doctrine.  Under that doctrine, if an employer can show that an employee was disloyal – either because he engaged in “conduct and unfaithfulness” that “permeate[d] [his] service in its most material and substantial part, or because he breached “a duty of loyalty or good faith” – it can recover all of the compensation that the employee was paid during the period of disloyalty.  Phansalkar v. Andersen Weinroth & Co., 344 F. 3d 184 (2d Cir. 2003).

• Breach of Contract
• Summary Judgment

Sometimes, the things that seem most straightforward and widely understood are the very things people tend to forget – or misunderstand – the most.  These things that “go without saying” often actually need to be said. 

Take the case of Professor Andrew Ortony of Northwestern University.  Professor Ortony – who, up until recently, taught computer science, psychology and education– was recently taught (or reminded) that his retirement agreement – which was written in clear language, fairly bargained-for by both sides, and entered into without any evidence of deception – would be enforced exactly as written, meaning the professor would be considered retired on the day the contract said he would. 

Seems straightforward.  But because he decided he didn’t want to retire on that day, Professor Ortony tried to get out of the contract, and the Fifth Circuit Court of Appeals held last week – unsurprisingly – that he couldn’t.  So, the first straightforward lesson from Professor Ortony’s case is this: if you make an employment agreement with your employer (or, if you’re an employer, and you make an employment agreement with an executive), make sure the agreement is something you want – or at least something you’re willing to live up to.  

• Age Discrimination
• Breach of Contract
• Severance Agreements

In May, iGate sacked its CEO Phaneesh Murthy, claiming that the Board decided to do so after its outside legal counsel found that Mr. Murthy’s failure to report his relationship with a subordinate employee violated iGate’s policy.  Outside counsel made that finding as part of their investigation of the relationship and the employee’s claim of sexual harassment.  (For spicier accounts of the office affair check out the news stories from the time – like this one.)  Last week, Mr. Murthy sued iGate in California state court claiming that his termination was not with cause and that he is therefore entitled under his employment agreement and company stock plans to compensation and benefits that the company has refused to pay.

• Breach of Contract
• Executive Compensation
• Termination With or Without Cause

Weather gurus are predicting snow, sleet, and rain for our area over the weekend.  Although my kids are hoping for the white fluffy stuff, this amateur prognosticator is predicting a downpour.  In keeping with this theme, the week’s biggest employment news is Robinson Cano’s $240 million deal with the Seattle Mariners (who are well accustomed to rainy skies).  But our sights here at Suits by Suits are on matters a little less lucrative:

• You still have a chance to win free admission to our Dec. 10 webinar, “Whistleblower Watch: Big Issues in the Latest Whistleblower Cases Under Dodd-Frank, Sarbanes-Oxley, and the Internal Revenue Code.”  For more details on this prize, click here.
• The First Circuit affirmed a summary judgment ruling in favor of Strine Printing Company against a former sales representative who claimed that his firing resulted in an “oleaginous mass of perceived wrongs.”  The decision addresses a number of employment-related claims, including unjust enrichment, breach of an implied or express employment contract, and misrepresentation.
• We’ve previously covered the exploits of Larry Conners.  Despite his year-long non-compete agreement, the St. Louis newsman is headed back to TV – as a pitchman.  He’ll be a spokesman for John Beal Roofing.
• Jeff Green of Bloomberg Businessweek brought us the latest trend in executive hiring – the “golden hello.”  These are multi-million dollar signing bonuses designed to entice new candidates to join the team.  Among them: the $45 million that Zynga paid to entice an industry vet, Don Mattrick.  Some are skeptical of the arrangements, noting that they don’t correlate with successful performance.
• A Louisiana appellate court has affirmed the dismissal of a lawsuit by former professors at Louisiana College, writes Charles Huckabee of the Chronicle of Higher Education.  The professors claimed that they should have been able to use certain books in teaching classes on religion and values, which were prohibited by the college’s administration.  The court refused to intervene on the ground that it was a religious dispute not proper for court involvement.
• Dominic Patton of Deadline Hollywood covered Jeff Kwatinetz’s suit against Prospect Park.  The producer and talent manager wants a Los Angeles Superior Court judge to decide whether a noncompete provision in his agreement with Prospect Park can permissibly bar him from competing for five years.   

• Breach of Contract
• Civil Litigation
• Executive Compensation
• Noncompete Agreements ‎
• Summary Judgment