On Tuesday, we examined the dismissal by a Georgia federal court of Lisa T. Jackson’s race-based discrimination claim against Paula Deen and others, and noted that, under Title VII, an employer may not discriminate against an employee for associating with employees of another race. But we don’t want you to be left with the impression that the association has to be between co-workers. Courts also have recognized “interracial association” Title VII claims for associations occurring outside of the workplace. The U.S. Court of Appeals for the Second Circuit is one such court.
Last week, a federal court in Georgia dismissed Lisa T. Jackson’s race-based discrimination claim against Paula Deen, her brother Earl “Bubba” Heirs, and their restaurant businesses. Earlier events in the Jackson v. Deen case – including Deen’s deposition testimony and what it may mean for alter ego liability – caught our attention at Suits by Suits. This recent ruling interests us as a reminder that it is not always the case that a white employee who works in an environment that is hostile to blacks has no claim for damages against her employer for race-based discrimination.
Earlier this week, a New York state court declined to second-guess an arbitrator’s decision that BDO, USA does not have to indemnify or pay the legal bills of its former CEO, Denis M. Field, in his criminal case.
As we have noted here before, the first battle in a legal dispute between a company and its former executive is often over whether the dispute will be decided by a judge (and, ultimately, a jury) or a private arbitrator. Field v. BDO underscores why the stakes for that battle are so high: if you don’t like the arbitrator’s decision, you almost certainly will be stuck with it. That’s because the standard that courts apply in reviewing arbitrators’ decisions – even decisions about what the law requires – is a very forgiving standard. By contrast, the standard that appellate courts apply in reviewing trial judges’ decisions is less forgiving, which means that losers in the courts have a better shot at reversing decisions they don’t like than losers in arbitration.
Yesterday, we observed that Paula Deen’s deposition testimony in the case filed by Lisa Jackson may be used to prove that one or more companies owned by Deen must pay for Jackson’s damages resulting from assault and battery by Deen’s brother, Earl “Bubba” Heirs, assuming that Jackson proves assault and battery. We said that, if Heirs worked for the companies, and the companies knew of Heirs’ misconduct and either expressly adopted it or implicitly approved of it, then the companies could be found vicariously liable based on a theory of ratification. But what if Heirs only worked for one of the companies? If Heirs is found liable, could the other companies also be found liable? They could, based on a theory of alter ego, and Deen’s testimony may be helpful in supporting the theory.
Once known for her frying, Paula Deen is now known for her firing. On Sunday, the Food Network announced that it would not be renewing Deen’s contract. Public debate has followed about whether Deen’s deposition testimony last month that she used the N-word in the past justified the network’s action. That’s a business decision for the network, not a legal question. However, the lawsuit that Deen was testifying in is chock-full of legal questions of the kind that fascinate us at Suits by Suits – starting with questions of ratification, or when an employer can be held liable for the intentional wrongdoing of one employee towards another employee. Deen’s testimony is relevant to these questions.
Yesterday we looked at a California federal court decision in Martensen v. Koch, in which ex-Oxbow executive Kirby Martensen has sued billionaire William Koch, alleging kidnapping, false imprisonment, conspiracy, and other claims related to his alleged treatment at the hands of Oxbow employees at the Bear Ranch in Colorado. Specifically, we looked at what the decision means in terms of whether a court can maintain personal jurisdiction over an out-of-state defendant; in the Martensen case, the clear take-away is that committing any portion of an alleged wrong within a state counts as having committed the wrong within that jurisdiction. So even though most of Kirby Martensen’s kidnapping and false imprisonment allegations relate to conduct that took place in Colorado, because he was allegedly placed on a private plane owned by Oxbow and flown to Oakland, California before being released, the court found that (for purposes of personal jurisdiction) Martensen’s alleged false imprisonment “that began on [Koch]’s private ranch by [Koch]’s agents [in Colorado] continued unbroken until [Martensen]’s release in Oakland, California,” and thus gave rise to personal jurisdiction over Koch in California.
Personal jurisdiction, however, is only the first step in the process of figuring out where you can and should be sued. Personal jurisdiction determines whether a court has any power over you at all, and is based on the principle – expressed in depth in yesterday’s post – that if you have never set foot in the state of Wyoming, you cannot be compelled to appear in Court in Wyoming.(*) But just because a state has personal jurisdiction over you doesn’t mean that state is the best place to handle a dispute. This is the question of venue. Read on.
As you probably know, we here at Suits by Suits have been fascinated by the strange case of Kirby Martensen, the former Oxbow Group executive who alleged that he was kidnapped and falsely imprisoned by billionaire William Koch. We teased for you last week that Koch’s motion to dismiss, to strike, and in the alternative to transfer venue of the case from California to Colorado was denied, and the case will proceed.
Now, we’ve gotten our hands on the judge’s decision and had a chance to review it in depth; particularly if you’re a civ pro geek like me, it’s worth a read. Even if you’re not, the decision helps any potential litigant -- and really, isn’t that all of us? -- understand where we can expect to sue or be sued. Read on....
April showers bring May flowers, which, as the old joke goes, usually bring these. At Suits by Suits, however, April brought a mix of interesting stories involving non-compete agreements, the mechanics of employment contracts, and all sorts of other topics:
Batman has been sued. Okay, not Batman, but the guy who played him, Mr. Mom and Beetlejuice in the movies – Michael Keaton. In this lawsuit filed earlier this month in federal court in Illinois, the company that produced the movie The Merry Gentleman (if you’ve never heard of it, that’s the company’s point) alleges that Keaton breached agreements to direct and act in the movie by failing to deliver a satisfactory first cut of the movie on schedule, by working at cross purposes to the company by promoting his own cut of the film to officials of the Sundance Film Festival, and by failing to perform other post-production directorial duties or to assist in promoting the movie. According to the company, if Keaton had performed his contractual duties, then the Christmas movie would have been released in time for the 2008 Christmas season, rather than May 2009, and, presumably, would have grossed more than the $350,000 than it did at the box office.
Assuming that the company’s allegations that Keaton breached the contracts are true and assuming that Keaton’s breach (rather than market forces or some failure by the company) caused the movie to flop, what are the company’s damages? This question is relevant not only to Keaton and The Merry Gentleman production company, but to all parties to a broken contract in which one party had promised to provide employment services to another party in exchange for compensation. In other words, the question is relevant to all contractually-based employment disputes – a frequent topic on Suits by Suits. The answer may not be what you think, especially if you think that, as damages, Keaton should just give back the compensation that the company paid him.
Earlier this week, we noted that, when shareholders go to court to challenge executive compensation as excessive, they are often unsuccessful because courts generally defer to the business judgments of corporate boards. So, what’s a shareholder who strongly disagrees with how much a company is paying management to do? The shareholder could vote with her feet by selling her shares. Or, she could propose that the company’s executive compensation practices or the board that approved them be put to a vote at the next shareholders’ meeting. Shareholder proposals like these often face stiff opposition by management, and could be left off the agenda all together if management obtains permission from the SEC to exclude them.
As the regulatory and business environments in which our clients operate grow increasingly complex, we identify and offer perspectives on significant legal developments affecting businesses, organizations, and individuals. Each post aims to address timely issues and trends by evaluating impactful decisions, sharing observations of key enforcement changes, or distilling best practices drawn from experience. InsightZS also features personal interest pieces about the impact of our legal work in our communities and about associate life at Zuckerman Spaeder.
Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.
John J. Connolly
Partner
Email | +1 410.949.1149
Andrew N. Goldfarb
Partner
Email | +1 202.778.1822
Sara Alpert Lawson
Partner
Email | +1 410.949.1181
Nicholas M. DiCarlo
Associate
Email | +1 202.778.1835