Maybe. A California case is testing the idea that you can get in trouble at work – or even fired – for having an affair even if you’re not having an affair. Even if, in fact, you’re not actually doing anything that would make someone think you were having an affair. Can you recover damages if you’re fired under these circumstances? We’ll have to see, as explained below.
Let’s start at the beginning. It’s generally considered good career advice to keep your love life and your work life separate. For their part, companies often encourage their employees to do so. Others ask coworkers in relationships to sign “love contracts,” which may or may not mitigate the ultimate impact if the relationship goes awry.
But sometimes, an executive can get into trouble even if her boss just suspects she’s having an affair with another boss. How can this come about, you ask? The answer is in a complaint filed earlier this month in California, entitled Alexander v. The Original Footwear Company.
It's been a busy week in suits by suits:
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.
Stop us if you’ve heard this before, but we’re still not a political blog.
Nevertheless, when the former Chairman of the Republican Party of Florida, Jim Greer, sues the Republican Party, Florida State Senate President Mike Haridopolous and Florida State Sen. John Thrasher for unpaid severance pay and $5 million in damages following his 2010 resignation – and the Republican Party replies with allegations that Greer engaged in fraud and money laundering, funneling $300,000 from the Republican Party to his own pockets, well, we can’t resist.
Twice, in fact. Back in September we advised you that Greer was filing suit, and that his lawyer was confident of victory. (“They’re [the Republican Party] dead. … Jim Greer will win the criminal case and Jim Greer will win the civil case.”)
Two days ago, the Republican Party struck back, moving to dismiss the portion of the lawsuit that includes the individual defendants, Sens. Haridopolous and Thrasher. But the Court rejected that argument, permitting Greer's lawsuit to go forward against both the Republican Party and the state senators, apparently on the theory that the individual legislators were acting as individuals and not on behalf of the Republican Party when they allegedly offered Greer $124,000 to resign back in 2010.
(Greer calls the offer a “severance payment”; media sources have not been so generous in their characterization.)
Although most of us don’t face the same sort of political issues that Jim Greer and the Republican Party of Florida do, many employers do face similar risks when they contemplate firing a prominent, high-level employee. For those employers, the “nightmare scenario” is that the employee will run down his or her former employer in the press, or possibly air dirty laundry that the employer would rather not have out in the open.
If you’re thinking that Jim Greer used that exact same strategy, you would be right. In his deposition – leaked to the press, of course – Greer called Republican Party officials “whack-a-do, right-wing crazies” not-so-secretly plotting to suppress minority votes in Florida. (The full transcript of Greer’s deposition can be found here.)
Often times, employers chafe at the idea of paying a high-level employee to go away; after all, they’ve already decided this person isn’t worth keeping. How can they possibly be worth paying? The practical reality is that sometimes the benefits of an amicable settlement – including a general release of all claims and non-disparagement and non-disclosure agreements – can leave the employer better off than simply rolling the dice.
We’re betting that the Republican Party of Florida wishes it had just paid Greer back in 2010.
Postscript: A grand jury indicted Greer on multiple fraud counts in 2010 and his criminal trial is scheduled for February, 2013.
We previewed this question on Monday, in our first of three posts (see here, too) about the lawsuit recently filed by former Goldman Sachs vice president Sergey Aleynikov, who beat back a federal prosecution and is now fighting state criminal charges for allegedly stealing the investment bank’s "secret sauce" computer code. Aleynikov seeks a court order directing the investment bank to not only indemnify him for the attorneys’ fees that he incurred in the now-concluded federal case (the subject of Monday’s post), but also advance his attorneys’ fees as the ongoing state case (the subject of today’s post) proceeds.
Indemnification and advancement are similar but distinct concepts. They both involve a company paying (or reimbursing) the legal fees of a current or former officer or director pursuant to a state law, a company bylaw or a contract, but they differ with respect to the timing of payments and the conditions that must be met before payment begins.
My colleague Ellen Marcus has written a great piece about Sergey Aleynikov, a vice president and computer programmer at Goldman Sachs who allegedly stole its proprietary computer code as he was heading out the door to work at a competitor. Aleynikov was indicted and convicted for breaking Federal law when he did so – but a Federal appellate court overturned his conviction. Now, though, he’s about to face New York State charges for the same alleged theft. Aleynikov has sued Goldman Sachs, arguing the investment bank has an obligation to reimburse him for the legal fees he’s already incurred (indemnification) and pay his new legal bills as he fights the state charges (advancement).
Ellen noted in her piece that the Aleynikov story “illustrates key concepts about indemnification and advancement.” There is, though, another piece of this puzzle that the Aleynikov matter also illustrates.
For a baseball player, batting .100 won’t get you into the Hall of Fame. But for Rosanne Ott, a former Black Hawk helicopter pilot turned portfolio manager, batting .100 kept her case alive. See Ott v. Fred Alger Mgmt., Inc., No. 11 Civ. 4418 (LAP) (S.D.N.Y. Sept. 27, 2012).
Ott sued her former employer Fred Alger Management (“Alger”), associated companies, and Alger’s CEO/CIO for alleged violations of the Investment Advisors Act, breach of contract, and the Dodd-Frank Act’s whistleblower provisions. She also filed a derivative claim against the CEO/CIO on behalf of Alger’s shareholders for breach of fiduciary duty. In her 10-count, 65-page amended complaint, Ott alleged that Alger had adopted a trading policy for her fund (the Health Sciences Fund) that allowed other Alger funds to make better trades at her fund’s expense.
Alger and the other defendants moved to dismiss. For four counts, Ott didn’t respond, and for five others, the district court decided that she had not adequately alleged supporting facts. That left only her whistleblower claim, based on the anti-retaliation provision of the Dodd-Frank Act, 15 U.S.C. § 78u-6(h)(1)(A)(i). (Say that cite three times fast.)
That’s the question presented by a recent lawsuit filed by Sergei Aleynikov, a computer programmer who was a Vice President at Goldman Sachs responsible for code relating to Goldman’s high frequency trading business (more on “HFT” here) before he left to work for a hedge fund – allegedly bringing Goldman’s “secret sauce” code with him. We’ve observed before that contractual rights to indemnification can sometimes lead to head-scratching results, but, depending on the outcome, this case may take the cake. Plus, it nicely illustrates key concepts about indemnification (our focus today) and advancement (our focus later this week).
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.