Thanksgiving is typically a time for gratitude, gathering with family, and acts of kindness among fellow men and women. But in one recent case, a bank used Thanksgiving to force-feed a separation agreement to its outgoing president.
The bank later claimed that the ex-officer had released his rights to benefits under a “top-hat” benefits plan, even though it was not mentioned in the separation agreement. In Buster v. Compensation Committee of the Board of Directors of Mechanics Bank, the plaintiff alleged, and the court agreed, that the bank’s interpretation of the separation agreement did not fly.
Steven Buster worked as president of Mechanics Bank between 2004 and 2012. During his tenure, Mechanics Bank had two retirement plans. The first was the Supplemental Executive Retirement Plan (SERP), a so-called “top-hat plan” because it was available only to a few, select senior employees. The accrual of benefits for the SERP was frozen in 2008. In that year, the bank adopted a separate Executive Retirement Plan (ERP).
Remember 2002? That year, A Beautiful Mind won best picture, and the University of Maryland won the NCAA basketball tournament. It is also the year that Rite Aid and its former General Counsel, Franklin Brown, began litigating over Brown’s indemnification rights. They are still fighting, which brings us to Brown v. Rite Aid Corp., CA No. 11596-VCL, the latest chapter in the 14-year-long dispute.
The Delaware Chancery Court is generally a forgiving forum for an director or officer seeking to vindicate indemnification or advancement rights conferred by a Delaware company. But there are limits, and a recent decision by the Chancery Court in the Brown case concerned one such limit: a claim for indemnification must be brought within three years of final disposition of the proceeding that triggered the indemnification demand.
When an employee sues an employer, the forum selection clauses in her employment agreement can affect where the claims can be litigated—but only if those clauses are enforced.
For example, we previously discussed a court’s decision not to enforce an employee’s agreement to arbitrate because the employer failed to countersign her employment agreement.
The Department of Justice’s recent Yates Memo creates a new emphasis on individual accountability for corporate or entity wrongdoing. It also enhances the risk to corporate employees that they will need to choose between cooperating with an employer’s investigation—and potentially incriminating themselves—or asserting their Fifth Amendment right to remain silent and risking their jobs. (For examples of this dilemma, see our posts here and here.)
But being fired for “taking the Fifth” is not a recent phenomenon.
In the last century, this issue arose in the 1950s, when employment contracts more commonly contained “good conduct” or “morals” clauses.
An employee who is accused of participating in corporate wrongdoing can face potentially life-changing choices almost immediately. When a company learns of alleged wrongdoing, it is likely to start an internal investigation into the misconduct. As part of the investigation, attorneys or other investigators will seek to interview those with relevant knowledge, including employees who are allegedly involved in the wrongdoing.
When that happens, the employees face a critical choice: do I stay silent, or do I talk to the investigators? If the employees refuse to talk, they could be fired; if they do talk, the government could use their statements against them in a criminal case.
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When a company learns that its employees may have done something unlawful, it should try to get the facts and figure out whether wrongdoing actually occurred. One way to do this is to conduct an internal investigation, in which attorneys or other investigators collect documents and interview employees to gather information about what happened.
But what happens when employees refuse to cooperate? Can they be fired and denied severance benefits that would otherwise have been due?
After a spate of horrific shootings at schools and businesses across the country, employers started conducting unannounced “active shooter” drills to train employees how to react if a murderous gunman shows up at their workplace. Unsurprisingly, some of these unannounced drills have gone awry.
In 2013, the Pine Eagle Elementary School in Halfway, Oregon, population 286, held an active shooter drill that was too much for its employees to bear. Now, Pine Eagle finds itself in the middle of a lawsuit in Oregon federal court, brought by former teacher Linda McLean.
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.
Owners of stolen trade secrets now have another weapon in their arsenal.
Last month, President Obama signed the Defend Trade Secrets Act (the DTSA), which creates a new cause of action in federal court for the misappropriation of trade secrets. The DTSA does not preempt state laws governing misappropriation of trade secrets, so employers and other trade secret owners may now bring actions under the DTSA and applicable state laws. See 18 U.S.C. § 1838.
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.