Suits by Suits

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.

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.

It is the norm for high-achieving employees to strive for and tout their successes. Recently, however, one person’s novel reaction to failure—his own termination—may show a future employer as much about his character as any of his considerable accomplishments.

Sree Sreenivasan was plucked from Columbia’s School of Journalism a few years ago to become the New York Metropolitan Museum of Art’s chief digital officer. According to Quartz, Mr. Sreenivasan brought the famed museum into the digital age through inventive social outreach efforts and a revamped, mobile-friendly website.

Facebook is as public a forum as they come, yet it’s ironic how intimate some posts can be, as if the user is thinking out loud for everyone to hear.

Posts can be funny, political, or just plain weird, while others allow us to commiserate, empathize, or laugh out loud as we take that ultimate step of “liking” them. Sometimes liking another person’s thoughts can carry a high cost, especially if those thoughts disparage one’s employer.

Triple Play Sports Bar and Grille, the disparaged party in this example, took issue with the Facebook activity of two of its employees. Employee Vincent Spinella, a cook, “liked” this statement of a former employee:

“Maybe someone should do the owners of Triple Play a favor and buy it from them. They can't even do the tax paperwork correctly!!! Now I OWE money...Wtf!!!!”

Bartender Jillian Sanzone added the comment, “I owe too. Such an asshole.”

Triple Play’s management noticed the online behavior and discharged Spinella and Sanzone for violating company policy relating to prohibited internet activity.

In our last post, we counted down our most popular posts of 2014, from A-Rod to Walgreen.  Now it’s time to take a look at the issues in executive disputes that are likely to draw plenty of attention in 2015.

1.            Dodd-Frank Bounties and Whistleblower Litigation on the Rise

In November 2014, the SEC released its annual report on its Dodd-Frank whistleblower award program.  The theme of the report is that Dodd-Frank is paying off – both for the SEC and for whistleblowing employees.  The SEC reported that it issued whistleblower awards to more people in its 2014 fiscal year than in all previous years combined, including a $30 million bounty to one whistleblower in a foreign country.  The number of whistleblower tips received continues to increase, and we expect news of more substantial awards in 2015.  Meanwhile, litigation over various Dodd-Frank issues, such as whether a whistleblower claim is subject to arbitration, whether the shield against whistleblower retaliation applies overseas, and whether a whistleblower must report to the SEC in order to bring a retaliation claim, will continue to percolate in the federal courts.

2.            The Supreme Court Weighs in on Employment Issues

A couple of key Supreme Court cases will address employee rights that apply across the board, from the C-suite to the assembly line.  In Young v. United Parcel Service, the Court will decide whether, and in what circumstances, the Pregnancy Discrimination Act requires an employer that accommodates non-pregnant employees with work limitations to accommodate pregnant employees who have similar limitations.  And in EEOC v. Abercrombie & Fitch Stores, Inc., the Court will address whether an employer can be liable under the Civil Rights Act for refusing to hire an employee based on religion only if the employer actually knew that a religious accommodation was required based on knowledge received directly from the job applicant.

Who doesn’t love the year-end countdown?  We’re here to offer you one of our own – our most-read posts in 2014 about executive disputes.  The posts run the gamut from A (Alex Rodriguez) to Z, or at least to W (Walgreen).  They cover subjects from sanctified (Buddhists and the Bible) to sultry (pornographic materials found in an executive’s email).  Later this week, we’ll bring you a look at what to expect in 2015.

Without further ado, let the countdown begin!

8.            The Basics: Dodd-Frank v. Sarbanes-Oxley

This post is an oldie but a goodie.  It includes a handy PDF chart that breaks down the differences in the Dodd-Frank and Sarbanes-Oxley whistleblower laws.  Each of these laws continues to be a hot-button issue for plaintiffs and employers.

7.            When Employment Relationships Break Bad

America may have bidden adieu to Walter White and his pals on Breaking Bad, but employment relationships continue to spin off in some very unpleasant ways.  Such was the case with Stephen Marty Ward, who ended up in federal prison after he threatened his employer with disclosure of its trade secrets, as we covered in this post.

Yesterday, we reviewed a recent decision by a federal court in Richmond in the case of Vanterpool v. Cuccinelli (yes that one), and when firing a government employee for speech or political affiliation may be okay under the First Amendment.  The answer is that it may be okay if the employee is in a policymaking position.  The court’s decision spells out why and what it means to have such a position.  The case is also a helpful reminder that staking out one position in litigation may undermine another. 

In her first complaint, Vanterpool apparently did not want to say that she posted the comment criticizing Cuccinelli on the Washington Post because she had denied doing so when she was confronted about the comment by one of Cuccinelli’s deputies, Charles E. James, Jr., who was also a defendant in the case.  James later questioned Vanterpool’s credibility and asked her to resign or be terminated.  If Vanterpool alleged in the complaint that she personally posted the comment, then that could have bolstered a defense by Cuccinelli and James that she wasn’t fired for speaking freely but for being dishonest.    

Earlier this month, a federal court in Richmond dismissed the lawsuit  of a lawyer named Samantha Vanterpool who worked in the Virginia Office of Attorney General when Republican Ken Cuccinelli was Virginia’s AG and was running to be governor.  (Democrat Terry McAuliffe won last November in a race that made national headlines.)  Vanterpool claimed that she was fired on the basis of her political affiliation in violation of the First Amendment. 

Vanterpool is a Republican but apparently not a Cuccinelli fan.  She was fired after she allegedly posted a comment to a May 2012 Washington Post story about Bill Bolling, who was then challenging Cuccinelli for the Republican nomination.  You can still see the comment (from “bzbzsammy”), which accuses “Cuccinelli of promoting Cuccinelli” while “Bolling is helping the GOP,” and of “NEVER [being] in the AG’s office and solely us[ing] the position for self promotion.”  

In honor of both our Tampa- and Baltimore-based colleagues (including yours truly), this week's Suits by Suits Inbox is rooting for the Tampa Bay Rays to defeat the Boston Red Sox in the American League Division Series; game 1 starts tonight.  Alternatively, if you're not into baseball, perhaps you'd prefer a tasty beverage?  Here's a link to 31 days of Disney-themed craft cocktails, one for each day of October.  With that in mind -- or perhaps in hand, depending on when you read this -- on with our weekly recap:

Since you’re already giving up all productivity during the big dance, why not check out the latest in Suits by Suits?

• Bloomberg says that Hercules Offshore has defeated a “say on pay” lawsuit brought by a shareholder who claimed that the Hercules board should not have ignored an investor vote that the company’s executive compensation was too high.  Was defeating this lawsuit one of the fabled “Twelve Labours”?

Employees use their work e-mails for all kinds of communications, from the business-related to the personal and private.  When a dispute arises, however, it’s getting more difficult to keep those private e-mails from seeing the light of day.

For example, last week’s Inbox highlighted one recent decision in which a New York federal court ruled that an executive had “no reasonable expectation of confidentiality or privacy” in his work e-mail.  United States v. Finazzo, No. 10-CR-457 (E.D.N.Y. Feb. 19, 2013). 

Today we're going to look at a federal statute that is increasingly becoming central to disputes between outgoing executives and their former employers -- a statute originally designed to prohibit computer "hacking."

Now, if you’re anything like me, when you hear the word “hacking,” you probably envision Matthew Broderick using a dial-up modem to break into his high school’s computer and change his grades.  (In fact, Broderick pulled this same trick twice in the 1980s; first in WarGames and then again in Ferris Bueller’s Day Off.)  Indeed, if you asked the average person to define “hacking,” they would probably come up with something like WarGames; that is, they would consider hacking to be breaking into a computer or network to which you were not given permission to access, in order to do something nefarious, like changing your grades or starting World War III.

It probably comes as no surprise that after those blockbuster movies (and some real-life events, too), Congress enacted a statute to prohibit “hacking” back in the heyday of the 1980s.  That statute – the Computer Fraud and Abuse Act (“CFAA”) – is still the law today, and is codified at 18 U.S.C. §§ 1030.

But what you might not know is that in many areas of the country, there's a court-interpreted disconnect between the CFAA’s definition of hacking and Matthew Broderick.  That disconnect, in turn, has become a very real issue today for departing executives and their employers.  For example, if you’ve been fired and you delete files off of your laptop before returning it, you may be civilly and even criminally liable under the CFAA in some jurisdictions.  (International Airport Centers, LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006).  (Less relevant – but more salacious – is the Justice Department’s efforts to prosecute a mom under the CFAA for lying about her age on MySpace.)  United States v. Drew, 259 F.R.D. 449 (C.D. Calif. 2009).

It all depends on how the courts in your area interpret the CFAA.  Read on....

Before you root, root, root for the Ravens in Superbowl XLVII; before you go pick up with that 100-piece platter of buffalo wings; before you even crack open a single cold one, you owe it to yourself to read this week's super-sized Inbox:

• A California appellate court reversed a trial court verdict for Julie Gilman Veronese, which had awarded her $1.3 million in damages against her former employer, Lucasfilm Ltd., which had terminated Ms. Veronese upon finding that she was pregnant out of claimed "concern for the health of the fetus."  Veronese has appealed to the California Supreme Court, which has 60 days to decide whether or not to take the case.  We'll be watching.
• A Florida appellate court has sought the guidance of the Florida Supreme Court as to whether a judge must recuse himself from cases in which he is "Facebook friends" with the prosecutor.
• In a story that's near and dear to us here at Suits by Suits, Martha Neil of the ABA Journal has written a short article collecting stories under the banner "When can workers be fired for Facebook posts and tweets?"   As you may know, we've had quite a lot to say on the subject; see our Facebook-related posts here, here, here, here, and here, just for starters.
• A New York state court judge has dismissed a wrongful termination suit filed by an employee of an agency of the United Methodist Church under the so-called "ministerial exception," ruling that to adjudicate the dispute would require him as a judge to interpret the denomination's religious code of conduct and thus violate the First Amendment.  The employee, Douglas Mills, had argued that his role was "primarily secular" in terms of promoting interfaith dialogue with other churches; the Court held that "even if Mills performed primarily secular duties, the ministerial exception will apply if his job duties reflected a role in conveying the church's message and carrying out its mission."
• It isn't all good news for churches, though; the St. Louis-based Truth in the World Deliverance Ministries Church found itself rather uncomfortably in the news this week after its pastor, Alois Bell, scratched out a tip at a local Applebee's, writing "I give God 10%, why do you get 18?" and replacing the six-dollar tip with $0.  How do we know that Pastor Bell did such a thing?  Because another waitress, outraged and insulted at the lack of a tip, snapped a photo of the receipt and posted it to the online site reddit.  The receipt went viral and Pastor Bell was shamed; unfortunately, the waitress who posted it was fired.
• If a $6 tip strikes you as extravagant, how about a $13 million one?  After having negotiated a $3.3 billion deal to sell off several of grocery and retail giant Supervalu's brands, outgoing CEO Wayne Sales will receive a $12.8 million severance package (a "golden parachute") before being replaced by Sam Duncan at some point in the first quarter of 2013, according to Supervalu's SEC filings.  Sales earns his golden parachute after a mere six months on the job.
• A federal judge in Washington, D.C. dismissed a wrongful termination lawsuit brought by former law professor Stephanie Brown against U.D.C.'s David A. Clarke School of Law, arguing that she had been improperly denied tenure in violation of the school's faculty handbook, as well as fired on the basis of race and gender.  The court determined that the handbook was not a binding contract and that Prof. Brown had presented insufficient evidence of race and gender discrimination.
• Finally, Robert Grattan of the Austin Business Journal penned two articles on covenants not to compete:  "Keys to a good noncompete contract," and "Who reads those noncompete contracts?  Not enough."

NLRB Holds Facebook Kvetching Among Co-Workers Is Protected “Concerted Activity,” But Caution Is Reasonable As Social Media Meets Established Legal Framework

Let’s be clear: this is not a blog about social media.  It’s a blog focused on disputes between executives and the companies they work for and manage.  Through that prism, we look at many different issues that affect these employment relationships, including pregnancy, politics, sports teams and even – ahem – insurance.  

We’ve also written a lot recently about social media -- specifically the impact of Facebook, Twitter, LinkedIn and their kin on employee-employer relations.  Social media are rather quickly changing many of the dynamics of how employees and companies interact, and the law is rapidly trying to catch up.  That means there’s a fast flow of new developments in this area. 

It’s important to write so much about this, we think, to be true to our core purpose of trying to keep you current on these developments.  So at the risk of appearing to dominate our pages with references to Facebook, today we’ll introduce you to a new and unique wrinkle to come out of the intersection of the employment world and social media: a limited protection against being fired for workers who use their social media accounts to kvetch together about their jobs or their employers.  Readers, meet the recent decision by the National Labor Relations Board in Hispanics United of Buffalo, Inc. and Carla Ortiz. 

The use of social media by companies and executive employees continues to get them in trouble.  We’ve covered that here, here, and here. 

Some companies have concluded that having a social media policy in place is enough to avoid problems with Facebook, Twitter, Instagram, and whatever other means to communicate have come down the pike.  But to work, a social media policy needs to meet at least two other conditions. 

First, a social media policy has to be clear.  Second, it also has to be communicated to, and clearly understood by, the company’s employees.

It may need more than that. But at a minimum, if the policy doesn’t have those two operating elements, then enforcing it can do a company and its managers more harm than good – at least when it comes to their reputations.  That, at least, appears to be the lesson we can learn from the case of Rhonda Lee, a Shreveport, Louisiana TV meteorologist. 

• Remember a few weeks ago when Apple’s CEO Tim Cook apologized in a letter posted on the company’s website for the maps app glitches on the new iPhone 5? Did you notice that Scott Forstall, Apple’s executive in charge of software for the iPad and iPhone, did not sign Cook’s letter? Reportedly, Forstall refused to sign the letter. Apple announced last week that Forstall will be leaving the company at the end of the year. Coincidence?
• A federal judge in Pennsylvania has thrown out on summary judgment a Computer Fraud and Abuse Act claim brought by Linda Eagle, the former CEO of Edcomm, Inc., against the company. Eagle claims that the company terminated her and then essentially hijacked her LinkedIn account – logging into the account using her password, changing her password, and changing the profile for the account from Eagle’s profile to the profile of Edcomm’s interim CEO. Eagle eventually regained control of her LinkedIn account. The court found that Eagle did not have evidence of a "loss" recognized by the CFAA – such as damage of a computer or computer system. Rather, her damages related to business opportunities that she claimed she lost as a result of her not being able to access her LinkedIn account. The court also threw out Eagle’s Lanham Act claim, finding no likelihood of confusion between the interim CEO’s profile and Eagle’s profile, or confusion about whether Eagle was still affiliated with Edcomm. However, the court allowed Eagle’s state law claims, including her conversion claim, to go forward.
• In the latest twist in the continuing saga of Eaton Corporation’s all-out litigation against six of its former engineers, Eaton has asked the trial court judge to stay the litigation until the Mississippi Supreme Court rules on Eaton’s request to have the judge replaced.

For two centuries, intellectual property disputes between employees and employers were guided by a relatively simple principle:  if you did something “in the workplace” – and you didn’t specifically bargain with your employer to keep it – then what you did was “on the clock” and that work product belongs to your employer.

If you’re a business professional or a lawyer reading this blog, chances are that notion seems awfully quaint right about now.  You know that smartphones are ubiquitous in our respective professions, and business gets done 24 hours a day, seven days a week.  That important client email gets answered at midnight on a Saturday from your basement – not at 9 am the next Monday from your office.

Whether our brave new wireless world is a mixed blessing is probably beyond the scope of this blog.  But one of the things we have noted is that the increasing commingling of the “workplace” with “personal” space is blazing new trails in previously settled areas of the law.  We look at another recent development in this area in context after the jump.

This week's latest news in suits by suits:

• Former Univision National Radio Sales President Laura Hagan has sued the company, its parent company, Katz Media, and the now-deceased CEO of Katz Media, Stu Olds, for discrimination and breach of her employment contract in federal court in New York. Hagan is 66 and was born in Ecuador. She claims that, despite her division consistently exceeding sales projections, Olds asked her to resign without explanation in October 2008. The EEOC issued Hagan a right to sue letter in May 2012. According to Hagan, Olds made repeated remarks to Hagan concerning her age, race and national origin, and, at a managers’ meeting in 2004 attended by 250 company employees, included in a slide presentation a photo of Carmen Miranda (of Chiquita Banana) that was manipulated to show Hagan’s face.
• Earlier this week, Facebook and the ACLU filed friend-of-the-court briefs in the appeal currently pending before the U.S. Court of Appeals for the Fourth Circuit presenting the issue of whether "liking" a political candidate on Facebook is constitutionally-protected speech. The issue arose in the workplace. Plaintiff was a deputy in the sheriff’s office in Hampton, Virginia, and clicked that he "liked" the Facebook page of the candidate challenging his boss in an election. His boss was re-elected sheriff and then fired plaintiff and some of his colleagues, allegedly because they did not support him in the election. A federal judge found that "liking" on Facebook is not protected speech and granted summary judgment to the sheriff. Kashmir Hill of Forbes has written this analysis of the arguments presented by Facebook and the ACLU that "liking" is, in fact, speech protected by the First Amendment.
• The U.S. Court of Appeals for the Sixth Circuit has held that former Thomas M. Cooley Law School professor Lynn Branham was not entitled to any rights protecting her against termination beyond those provided in her one-year employment contract. Branham argued that the ABA’s suggested tenure policies, including its suggestion that professors "should have permanent or continuous tenure" should be read into her employment contract. The Sixth Circuit held that Branham’s employment contract did not incorporate that suggestion from the ABA, which is only a suggestion, not a requirement, in any event.

This just in: on Thursday, Illinois Governor Pat Quinn signed a new law making it unlawful for an employer to request or require an employee or prospective employee to provide the password for his or her account or profile on a social networking site. The law, which amends Illinois’s existing Right to Privacy in the Workplace Act, and goes into effect on January 1, 2013, supposedly addresses the trend of employers requiring job applicants to give access to their Facebook profiles as part of the job application process.

We have previously discussed the perils of social media in the workplace, including the much-publicized case in which women’s clothing retailer Francesca’s fired its CEO for disclosing insider information over Twitter.  (The gem was his tweet of “Board meeting.  Good numbers = Happy Board” several hours before the actual board meeting itself at which the numbers were disclosed.”)

We’ve also discussed some of the problems of unauthorized disclosure from the perspective of the employee, which is of course exacerbated by near-ubiquitous social media technology at work that makes it trivially easy for anyone to fire off an email, a Tweet, or a post on Facebook without considering whether that disclosure might violate the employee’s legal obligations.