Ghosts, ghouls, and ghastly liability; the last is certainly enough to spook any employer. For this Halloween, we take a trip down Elm Street to revisit the most startling nightmares we’ve ever covered.
It Came From the General Counsel’s Office. In March of this year, we told the story of an in-house attorney who won a $14.5 million verdict against his employer after he raised concerns about FCPA violations at the company. The company’s case faltered when the trial revealed that a negative review of the attorney had been backdated.
In the corporate world, the treats offered to executives can be as sweet as stock incentives and cash bonuses. But the tricks can be as sour as individual liability for wrongdoing and salary disgorgement.
NJ Supreme Court Makes It Easier For Employers To Take Back Executive Salaries
Lately, we’ve been discussing the Yates Memo and the alarms it must be sounding in corporate board rooms across the country. In a similar vein, the New Jersey Supreme Court offered little comfort to spooked executives when it recently decided to broaden the remedies available to employers who seek disgorgement of former high-level employees’ salaries.
We recently discussed the SEC’s proposed rules pursuant to the 2010 Dodd-Frank Act regarding the clawback of executive compensation under various circumstances related to accounting restatements. Now it seems Hertz’s former CEO, Mark Frissora, may become one of the first test cases should these rules survive the comment period. According to Footnoted, upon Frissora’s resignation last September, he received over $10 million plus other benefits. But the company recently filed a 10-K for 2014 that not only included restated results for 2012 and 2013, but also made a disclosure that could suggest a possible future effort to claw back Frissora’s severance package. The disclosure blamed Frissora for creating an environment that “in some instances may have led to inappropriate accounting decisions and the failure to disclose information critical to an effective review of transactions and accounting entries.” Perhaps another interesting twist is whether any potential clawback will have an effect on Frissora in his new role as CEO of Caesar’s Entertainment, a position he assumed two weeks ahead of Hertz’s delayed filings.
California is known for its skeptical treatment of employers’ efforts to enforce non-competes, but it may not be as friendly toward all employees as originally suspected, according to The National Law Review. In 2014, California resident Stacey Sabol-Krutz left her position with Quad Electronics, a Michigan-based employer, to take a position with a rival company, which was also based in Michigan. Sabol-Krutz had started working for Quad in Michigan, and signed her employment contract there, but moved to California in 2011. Her employment contract specifically named her new employer as a company that Sabol-Krutz wouldn’t join for 12 months after leaving Quad. After Quad found out about Sabol-Krutz’s new job, it sued her for breach of contract. She, in turn, filed suit in California, attempting to invalidate the agreement under California law. The California court, noting the absence of a choice of law provision in the agreement, found that Michigan law applied, using a “governmental interest” test. Although courts may refuse to apply a choice of law provision when construing restrictive covenants (as we illuminated here), Sabol-Krutz’s move to California to work for an out-of-state employer did not win her the protection of California law.
On Monday, AutoZone found itself on the wrong end of a $185 million verdict in favor of a former store manager, Rosario Juarez. Yes, you read that right. $185 million. This stunning verdict appears to have been the result of Juarez’s allegations of discrimination and retaliatory discharge, combined with an insider turned witness who provided extremely damaging testimony against the auto parts retailer.
In her complaint, Juarez alleged that AutoZone had a “glass ceiling” for women employees, which it kept in place through a hidden promotion process where open positions were not posted. According to Juarez, she succeeded in cracking the glass ceiling, securing a store manager position, but when she became pregnant, she was treated differently by her district manager. After giving birth, she complained about the unfair treatment and was soon demoted by the manager, who told her that she could not be a mother and handle her job. Later, she was terminated as the result of a loss prevention inquiry, in which she refused to participate in a “Q&A” statement about a theft at the store. Juarez alleged that the loss prevention department’s request for a statement was a pretext to fire her.
We’ve spent a lot of time on this blog discussing allegations of pregnancy discrimination like these. The short of it is that a company can’t treat pregnant women, or women who have given birth, differently than it treats other employees. But we’ve never covered a verdict for pregnancy discrimination that looked more like a Powerball win than a litigation result.
Grab your matzoh or Scotch cream eggs or whatever your favorite snack is this time of year and settle in for this week’s Inbox on Suits by Suits:
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:
Let’s start this story with a basic truth: it’s generally a bad idea to tell a pregnant woman that her hormones will make her “get emotional” and get “caught up in things” in a way that affects her judgment.
You need not take this from me as a lawyer-blogger. Take it from me as a guy whose wife is pregnant with our first child. Blaming anything in our house on pregnancy hormones is a one-way ticket to the basement couch.
It’s also a bad idea to say this to a pregnant employee, as department-store chain Target Stores is learning. We’ve written about the Pregnancy Discrimination Act of 1978 before, and in some high-profile contexts. But the case of Spigarelli v. Target, which will move forward in federal court in Pennsylvania now that Target has lost its summary judgment motion, shows that this lesson continues to bear discussion.
For the second time during this quiet week in late August, pregnancy is in the headlines.
The first time, of course, involved Rep. Todd Akin, a candidate for the U.S. Senate from Missouri who claimed – and then swiftly retracted – that women who are “legitimately raped” don’t get pregnant. That’s led pregnancy – and abortion politics – to dominate news coverage.
But here’s another story with pregnancy at its core: this week, a federal judge in Manhattan ruled that a former buyer for fashion house Gucci can move forward with her case alleging that the luxury-goods company fired her after she became pregnant.
On Monday, we talked about how plaintiffs can prove pregnancy discrimination by direct evidence – the proverbial “smoking gun.” Now, it’s time to tackle how a plaintiff can prove pregnancy discrimination under the McDonnell-Douglas test, through making a prima facie case of discrimination and then rebutting the employer’s assertion that it acted for legitimate, nonpretextual reasons. Once again, the star of our hypothetical scenario is Marissa Mayer, the newsworthy new Yahoo! CEO.
Marissa Mayer is big news these days. She’s the new Yahoo! CEO, at only 37 years old. She’s also expecting her first child, and made waves when she told Fortune Magazine that her maternity leave would be a “few weeks long” and she’d “work through it.”
All of the hullaballoo over Mayer’s career and personal life made the Suits by Suits team curious. What if Mayer suffered repercussions at Yahoo! due to her pregnancy or upcoming childbirth? How would she be able to prove that Yahoo! discriminated against her?
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.
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