This week in Suits by Suits:

• Merrill Lynch reportedly reached a $160 million settlement in a class action discrimination lawsuit brought by former employees alleging that the brokerage firm systematically steered its African-American financial advisors away from the highest-earning clients and portfolios, resulting in systematic disparate application of the firm’s facially neutral “pay-for-production” compensation schedule.
• We’ve previously told you about Massachusetts House Bill No. 1715, which, if enacted, would establish that noncompete clauses of six months or less are presumptively reasonable, while essentially prohibiting the enforcement of such clauses over six months in length unless certain narrow statutory exceptions apply.  Discussion of the proposed bill -- which already has the endorsement of Gov. Deval Patrick – heads to a hearing before the state’s Joint Committee on Labor and Workforce Development next Tuesday, Sept. 10.  We will of course keep you apprised of any developments.
• The state legislature in Pennsylvania is considering a bill, S.B. 300, that would add “sexual orientation, gender identity or expression” to the Pennsylvania Human Relations Act (P.L. 414, No. 51), which currently prohibits discrimination by employers on the basis of race, color, religious creed, ancestry, age or national origin.
• Continuing the public debate over say-on-pay:  this week, the liberal think-tank Institute for Policy Studies released a study showing that nearly 40% of the country’s highest-paid CEOs “eventually ended up being fired, paying fraud-related fines or settlements, or accepting government bailout money,” suggesting that companies aren’t receiving much bang for the buck.
• Over at Bloomberg’s Labor and Employment Blog, Patrick Dorrian has a nice summary article up which surveys the landscape of increased religious discrimination cases brought before the EEOC; go check it out.
• Finally, we’re not sure if HR.BLR.com’s legal editor, Holly Jones, is reading our “State-by-State Smackdown” series or not – but she’s written a handy checklist for employers looking to draft an enforceable noncompete clause that incorporates many of the stories we’ve been covering here.

• The Inbox

Even in the pre-Labor Day lull, things still happen here at the Suits by Suits Global Operations Center in our Nation’s Capital.  This week, we welcomed a new panda cub at the National Zoo, and celebrated the 50th anniversary of the famous March on Washington for Civil Rights, which remembered Martin Luther King Jr.’s historic “I Have A Dream” speech. 

Things happened elsewhere in the broader world of disputes between executives, other employees and employers, too, including:

• The news anchor is still mad-as-h-e-double-hockey-sticks, and he’s not going to take it anymore:  We’ve covered the public and somewhat bitter dispute between TV newsman Larry Connors and his former employer KMOV-TV in St. Louis; now, Connors has sued the station for defamation.
• J. Edgar Hoover, please call your office: An FBI special agent alleges the bureau retaliated against him after he reported that two colleagues had “allegedly engaged in sexual misconduct in addition to a ‘clear pattern of fraud, waste and abuse over a period of years.’” 
• And another involving the FBI: Media giant Thomson Reuters is stridently rejecting a former employee’s argument that he was fired after he leaked information about alleged insider trading violations to the FBI.  The company’s motion to dismiss the suit also says the former employee doesn’t qualify as a whistleblower under Dodd-Frank.  Interesting fact about our modern trading exchanges: the case involves the disclosure of some economic data Thomson Reuters compiles to certain customers two seconds before others get it. 
• Maybe he tried to steal that nasty Mucinex guy: A cough syrup manufacturer lost its bid to reinstate claims for breach of contract and unfair competition against a former employee when a New Jersey appellate court affirmed the lower court’s dismissal of them.  The court ruled that the confidentiality provision in the manufacturer’s employment agreement was too broad to be enforceable under New York’s law, which applied to the dispute: “In sum, the confidentiality provision is unenforceable under New York law because it is overly restrictive in time and scope, does not further a legitimate business interest, is contrary to established public policy, and is unduly burdensome” to the employee.  No word on any other side effects.     
• Smashing a printer with a baseball bat may no longer be the real problem departing employees pose: “Half of all departing employees retain confidential company files following their termination,” concludes a study by Symantec reported here.  
• “No severance pay but still crazy rich”: That’s the headline on this CNNMoney article about retiring Microsoft executive Steve Ballmer, and it says it all.  The article explains that Microsoft doesn’t have retirement or severance for its executives, but Ballmer won’t be complaining too loudly: as the 22nd richest person in America, his Microsoft shares alone are worth over $11 billion.  

• Breach of Contract
• The Inbox
• Whistleblowers

• • Maybe it’s not fair to name a style of politics after that beautiful city by the lake, but the city’s case is not being helped by the finger pointing this week after an auditor said that the Metra rail agency’s insurance policy could have covered the costs of litigation with Metra’s former CEO Alex Clifford. The high cost of litigation apparently was used as a rationale for the $718,000 separation agreement between Metra and Clifford. This reminds us of one of our mantras here at Suits by Suits:  if litigation is on the horizon, check your insurance policy!
  • Not that the academic style of politics seems much better. On Wednesday, the Iowa Court of Appeals reversed a jury’s award of $784,000 to a former Iowa State University employee who claimed that he was viciously harassed by his superiors after blowing the whistle on his boss for financial misconduct. However, the court left intact the jury’s $500,000 award to the employee for intentional infliction of emotional distress. At trial, the employee presented evidence that his superiors made false accusations to campus police that he was a security threat and potential mass murderer.
  • Here at home (no politics here!), the D.C. Superior Court ruled on Tuesday that three local police officers did not have a valid claim against the D.C. government. The officers contend that they were denied assignments and referred to internal affairs in retaliation for their speaking up about the ineffectiveness of breath-testing equipment used by the police department for suspected drunk drivers. The court found that the evidence does not support the officers’ allegations.
  • Finally, a new survey is out about office politics showing that most people prefer not to friend their boss on Facebook.

• The Inbox

It’s unseasonably cool here in Washington, DC, where most of our Suits by Suits editors toil.  News about the latest in disputes between employers and executives, however, is always in season.  Here are the latest headlines:

• Ruth Simon and Angus Loten of the Wall Street Journal brought us this excellent take on the rising tide of non-compete litigation.  According to Simon and Loten, non-compete agreements are spreading beyond the executive ranks to sales representatives, engineers, and researchers.  For more, check out our ongoing State-by-State Smackdown series on the changing law of non-competes in various states (here, here, here . . . and here).
• A conference call hosted by AOL’s chief exec Tim Armstrong took an unpleasant turn when Armstrong fired – on the spot – Abel Lenz, an employee who was videotaping the call.  The New York Times reported that Armstrong later admitted that he made a “mistake” in the hasty firing, which was broadcast to a thousand employees.  Lenz’s photos of his last moments at AOL later surfaced online at jimromenesko.com. 
• The Third Circuit upheld a decision by the Luzerne County (PA) Retirement Board to terminate the benefits it was paying to a former county clerk, William Brace, based on Brace’s guilty plea to a bribery charge.  Brace claimed that the termination violated his constitutional rights, but the court disagreed, holding that Brace was not entitled to a hearing before the decision.  Brace’s crime appears to have been the acceptance of a $1,500 tailor-made suit from a county contractor, which puts this case in the unique category of Suits by Suits over Suits.
• Matt Reynolds of Courthouse News Service reported that IMAX has sued a competitor for trade secret misappropriation.  IMAX’s complaint alleges that Gary Tsui, a former IMAX employee, sold its 2-D and 3-D conversion technology to the competitor, GDC Technology USA, which is now using the secrets to compete with IMAX.  It calls Tsui an “international fugitive.”  Sounds like this case may be exciting enough for the big screen.
• A former U.S. Bank manager, Serge Adamov, has successfully appealed the dismissal of his claim that he was terminated in retaliation for complaints of discrimination based on his Azerbaijani origin.  The Sixth Circuit held that when an employee does not exhaust his remedies in the Department of Labor before bringing suit in federal court, that failure does not deprive a district court of jurisdiction over the case.  As a result, because the bank did not raise a failure to exhaust as part of its motion to dismiss Adamov’s suit, the district court could not raise it on its own as a ground to get rid of the claim.

• Discrimination
• Motions to Dismiss
• Noncompete Agreements ‎
• The Inbox
• Trade Secrets

Yes, yes, we’ve asked you before to nominate us to the you-know-what, but we swear this is the very last time because nominations for that prestigious list close today.  We only ask because for lawyers who blog, this list is like the Academy Awards, and the Emmys, and the Grammies, and the Country Music Awards, all rolled into one.  And at Suits by Suits we are, in fact, ready for our close-up, Mr. DeMille (take the afternoon off if you know what movie that’s from).  Thanks if you’ve already nominated us. 

We’re not all about awards around here, though.  We’re hard at work.  While the streets around our Suits by Suits Global Headquarters are notoriously quiet while most folks are at the beach and Congress has left town, we’ve been scouring the planet looking for interesting stories to bring to your attention.  We have much to do – the CEO of Amazon is not yet paying $250 million for our work, unlike the venerable blog-printed-on-dead-tree just up the street.  Perhaps it’s because they have horoscopes and we don’t. 

In any event, here are some more items to add to that stack of must-read beach books:  

• Discrimination
• The Inbox
• Whistleblowers

This week in Suits by Suits:

• Last month, we discussed in depth the recent Illinois appellate court decision in Fifield v. Premier Dealer Services, which permits employees to challenge the adequacy of consideration when they sign noncompete clauses (and held that employment of less than two years was insufficient consideration).  Yesterday, we learned that the Illinois Chamber of Commerce has filed an amicus brief on behalf of Premier's efforts to seek certiorari of the decision to the Illinois Supreme Court.  (link; Law360 subscription required)  We will of course continue to monitor whether the Illinois Supreme Court takes this case as well as its ultimate disposition, and as soon as we know, you'll know.
• Securities and Exchange Commission Chairwoman Mary Jo White told a Senate Banking Committee that the SEC intends to promulgate a rule requiring publicly-held companies to disclose CEO pay -- a provision required by the 2010 Dodd-Frank Act but yet to be implemented by the SEC -- "in the next month or two."  Our previous discussion of "say on pay" can be found here.
• Nearly a year ago, we warned that mandatory arbitration clauses aren't always the boon for the employer that they're perceived to be -- particularly in cases involving high-level employees who have the resources to arbitrate effectively -- because of the difficulty in overturning an arbitrator's findings.  That principle played out again this week in Doral Fin. Corp. v. Garcia-Velez, in which the U.S. Court of Appeals for the First Circuit upheld an arbitral award ruling in favor of an employee seeking severance pay despite the fact that the panel refused to permit the former employer to engage in the type of discovery that would have been permissible had the case been taken to trial (here, the issuance of 3rd party subpoenas to the plaintiff's new employer).
• On Tuesday, July 30, the Senate reintroduced the Protecting Older Workers Against Discrimination Act, legislation that would overturn Gross v. FBL Fin. Svcs., Inc., a 2009 U.S. Supreme Court decision that held that a plaintiff bears the burden of proving that age was the deciding ("but for") factor in adverse decisions taken by his or her employer.  The Protecting Older Workers Against Discrimination Act would lower the burden to require a showing that discrimination was "a motivating factor" but not necessarily the sole factor.  We will keep you posted as to how the bill fares.
• The Wall Street Journal asks whether a July 17, 2013 ruling by the U.S. Court of Appeals for the Fifth Circuit requiring that whistleblowers must report their grievances to the SEC to be protected from retaliation under Dodd-Frank might tee up a successful appeal to the U.S. Supreme Court to resolve a potential split among the circuits.
• Relatedly, a federal court in New Jersey found in favor of the plaintiff, Robert Scull, in his whistleblower lawsuit against The Wackenhut Corp. -- now G4S Secure Solutions -- alleging that he was terminated in retaliation for raising concerns about the company's monitoring of nuclear plants.  Scull, a former supervisor, was awarded $400,000 in back pay by the court.  But the story doesn't stop there:  as a result of Scull's successful lawsuit, the federal Nuclear Regulatory Commission has ordered PSEG Nuclear, which operates nuclear power plants in New Jersey and Pennsylvania, to prepare a report detailing "the company's efforts to protect whistleblowers from retaliation," in an effort to ensure that employees are free and willing to raise safety and regulatory concerns.  And yesterday, the House of Representatives conducted a hearing on the Bonneville nuclear power plant's alleged discrimination against veterans and retaliation against whistleblowers.
• The U.S. Court of Appeals for the Fifth Circuit has affirmed a district court's summary judgment against a former ConocoPhillips director of acquisitions and divestitures ("A&D"), John D. Clayton, in his now-unsuccessful effort to seek $600,000 in severance pay.  The Fifth Circuit held that Clayton failed to plead with specificity his claims that he had been subjected to a "substantial reduction in responsibilities or position" when his former position (company-wide director of A&D for Burlington Resources, Inc.) was reduced to a single department following a merger with ConocoPhillips.  ConocoPhillips successfully argued that there was no such reduction in going from director of all A&D for a smaller company to directing A&D for only one department in a significantly larger company.
• And finally, in a case that's garnered some national attention on both the news and comedy circuits, the City Council of San Diego voted not to pay for Mayor Bob Filner's legal bills incurred in defending himself against charges of sexual harassment brought by a former staffer, Irene McCormack.  However, the Voices of San Diego newspaper notes that seven months earlier, the same Council voted to cover the defense costs of a former police officer charged with sexually abusing women during traffic stops, as well as prior city officials charged with wrongful termination.

• The Inbox

Our Suits by Suits Inbox this week:

• Courtney McGrath, the former barn manager for Las Vegas entertainer Wayne Newton, has sued him for defamation. McGrath claims that Newton falsely accused her in a handwritten note posted to the barn door of killing his horse Infinity. Infinity suffered from a disease in its pituitary gland.
• Steven Jacobs, the former CEO of Las Vegas Sands Corp.’s China unit who claims that he was wrongfully terminated for blowing the whistle on alleged ties between the casino company and Chinese organized crime, asked the Nevada Supreme Court this week to allow a hearing on jurisdictional questions to go forward in the trial court even while the casino company appeals earlier decisions against it by the trial court.
• Maria Alvarado, the former laundry manager of Valet Services, Inc. can make a claim for unemployment benefits against Valet, even though she was not fired.  According to a decision this week by the D.C. Court of Appeals, Alvarado had good cause to leave if her boss verbally abused her. Alvarado claims that her boss frequently would call her names, including "stupid," and "a piece of crap."
• Joseph Whittaker claims in a lawsuit that he filed against Car-Mart in Missouri federal court that he was terminated as general manager of a Car-Mart location in Cape Girardeau for his severe obesity in violation of the Americans with Disabilities Act.

• The Inbox

Here in the Baltimore-Washington area, we’re trapped under a dome - a heat dome.  Like the inside of my car on these 100-degree days, disputes involving executives are also heating up, as the latest in Suits by Suits news shows:

• We’ve covered again and again the fact that district courts are broadly interpreting the Dodd-Frank whistleblower retaliation provision to include employees who don’t report misconduct to the SEC.  The Fifth Circuit has now bucked that trend, in Asadi v. GE Energy (USA) LLC.  We’ll cover this important development in depth next week.
• In close-to-home news, St. John Barned-Smith of the Montgomery Gazette writes that a Montgomery County, Maryland judge denied the Landon School’s request for summary judgment on a wrongful termination claim brought by its former chief operating officer.  Timothy Harrison contends that Landon’s headmaster ignored his reports that supervisors were discriminating against Hispanic employees.  According to the article, Harrison also complained about the headmaster’s annual $800,000 salary.  (Thanks in advance for finishing this blog post instead of dropping everything and applying for headmaster jobs.)
• Viacom convinced Judge Sue Robinson of the U.S. District Court for the District of Delaware to throw out a shareholder lawsuit alleging that company directors improperly awarded tax-deductible bonuses.  The July 16 opinion in Freedman v. Redstone, Civ. No. 12-1052-SLR, is here.  But what Delaware giveth, it also taketh away: Viacom suffered a $300 million loss in the Delaware Supreme Court this week in a different shareholder dispute.

• Executive Compensation
• Fiduciary Duties
• The Inbox
• Whistleblowers
• Wrongful Termination

This week in Suits By Suits:

• If you've been reading our "State-by-State Smackdown" series on noncompete agreements, you know that this is a hot legal area right now.  From a business perspective, the Wall Street Journal's MarketWatch reports that more and more firms are requiring noncompetes from their employees, which may result in perceived overreach when those clauses are tested in court.  Last month, we discussed retailer Best Buy's broad new noncompete clause.
• In an interesting twist, a Texas state appellate court held that an arbitrator could award a one-year extension of the parties' one-year noncompete clause contained in a settlement agreement.  Nationsbuilders Ins. Svcs, Inc. v. Houston Int'l Ins. Group, Ltd. et al. (No. 05-12-01103-CV; Tex. 5th App. Dist. July 3, 2013).  The appellate court overturned the trial court's refusal to confirm the arbitration award on the ground that the arbitrator had "exceeded his powers" pursuant to the Federal Arbitration Act, 9 U.S.C. § 10(a).
• Chicago, Illinois began an investigation of the $442,000 in severance payments received by outgoing Chicago metropolitan rail agency Metra CEO Alex Clifford, who resigned last month with nearly eight months to run on his contract amidst complaints that Clifford was "abrasive, autocratic, [and] unaware or unwilling to work with politicians who have say-so over Metra funding."
• Following up on a story from across the pond that we covered last week: the British Commons Public Accounts Committee is investigating nearly £25m in severance pay awarded to 150 outgoing BBC executives, many of which are alleged to have exceeded the amounts called for in the former employees' employment agreements.  The chairman of the BBC Trust has testified that he knew nothing about such payments; the former director-general claims otherwise ("Aye ye did.  I told you.").

• More international news:  counsel for the Chinese Football Association (that's soccer to our U.S. audience) says that the league is likely headed to binding arbitration before the international Court of Arbitration for Sport regarding disputed severance pay for former coach Jose Antonio Camacho, who was fired as the coach of China's national soccer team following last month's 5-1 loss to Thailand.
• We admit it:  occasionally we follow reality TV news -- but only because of the fascinating legal implications!  So, uh, perhaps we were aware of the strange case of Amy's Baking Company -- an Arizona eatery featured on the Fox reality show "Kitchen Nightmares," hosted by famously shouty chef Gordon Ramsey -- and the corresponding public meltdown, which has (of course) gone viral.  Late last month, Radar Online secured a copy of ABC's employment contract, which was brought to our attention because of the (almost certainly unenforceable) one-year noncompete clause contained in paragraph #20.  Earlier this week, however, the owners of Amy's Baking Company have claimed that they've revised their contract, eliminating the noncompete clause and other objectionable provisions including keeping employee tips.  [If you haven't seen the original "Kitchen Nightmares" episode, you can watch it in full on YouTube here.]
• Finally, if you'll forgive us a bit of self-promotion:  Law360 (subscription required) had a great interview with our own Jason Knott, and Andrew Torrez was quoted in a piece by Crain's Chicago Business discussing the implications of the Fifield decision that was analyzed here last week.

• The Inbox

Here at Suits-by-Suits Headquarters in Washington, D.C. we’re all smarting from having our town named one of America’s snobbiest cities.  Although we’re not all snobby by geography: one of our editors, P. Andrew Torrez, is in fact based in a wonderful place called Charm City.

But we’re not going to be mad for long, because it’s the week we celebrate the Declaration of Independence.  As Americans, we revere this document that sets out our basic freedoms and lays the foundation for our nation.  And, as lawyers, we’re proud that its author Thomas Jefferson, one of our own breed, did such a poetic job of setting forth his case with clarity and brevity.  So, we’ll try to borrow some of his best lines in the Declaration for this week’s Inbox, where we highlight the interesting things that have come over the transom: 

• “He has …sent hither swarms of Officers to harrass our people, and eat out their substance.”  There’s always much eating of substance – and networking – at Rasika in D.C.’s West End. (Indeed, the article that calls D.C. “snobby” uses Rasika’s clientele as evidence of snobbiness).  Our friends at the Blog of Legal Times wrote this interesting article about how Rasika is suing its former executive chef for the return of some $30,000 the restaurant spent in immigration-related fees; it also alleges the chef used confidential business information to get a new job.  We’ll watch this one.
• “Our repeated Petitions have been answered only by repeated injury.” We’ve written before about the heated dispute between Don Marsh, former CEO of Marsh Supermarkets, and the grocery store chain.  Mr. Marsh was found liable in February to the company for $2.2 million in expense reimbursements and other items he wasn’t entitled to.  Now, in a separate dispute over $2 million in severance Mr. Marsh claims he is due, Mr. Marsh says his company’s arguments for not paying the remaining severance are “hogwash,” “flip-flopping,” and “simply wrong.” Cleanup on Aisle 5…
• “…they are endowed by their Creator with certain unalienable Rights:” Religion and employment together is a constant and volatile source of friction, and this week is no different.  The EEOC, responding to complaints from Liberty Institute, a group that purports to defend religious freedom, has reversed its dismissal of teacher Walt Tutka’s claim that he was illegally terminated.  Tutka was fired by a New Jersey school district after giving his pocket Bible to a student who asked about a biblical quote; he also alleges his firing was based, in part, on his membership in Gideons International, the Bible-distributing group. 
• “For cutting off our Trade with all parts of the world”: Or, at least, cutting a company off from its clients.  That is what specialty equipment maker Daily Instruments says its former sales manager, Erik Heidt, tried to do when he copied client profiles, order lists, and other information just before going to work for a Daily Instruments competitor.  In its suit against Heidt, Daily says such conduct violates Heidt’s employment agreement.
• “He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.”  Or lack of salary: Mark Pincus, the founder and CEO of Zynga, will continue to get just $1 in compensation in his new role as “Chief Product Officer;” according to Fortune magazine, he won’t get a change-in-control severance payment or increase in his equity stake as former Microsoft executive Don Mattrick becomes CEO.
• “They too have been deaf to the voice of justice and of consanguinity:” Company executives and company boards, perhaps, as they continue to provide large golden parachutes in the face of public opposition – at least according to this New York Times story about a University of Michigan study, analyzed here.  We take no position on whether such payments reflect what the study calls an “empathy gap” between companies and stakeholders, but suggest it’s a good practice for companies to consider the public appearance of large golden parachutes when they contemplate them. 

• The Inbox