Show posts for: Fiduciary Duties

  • Phishing. Spoofing.

    These words may sound silly, but for employers, they are anything but.

    Phishing is the attempt to obtain sensitive electronic information—such as usernames, passwords, or financial information—under false pretenses. Often, when bad actors engage in phishing, they use email spoofing—sending emails that appear legitimate but are anything but. These emails can dupe users into disclosing confidential personal or company information.

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  • Companies want to attract talented leadership, and protections for officers and directors against lawsuits can be part of the total package.

    This is one reason why many businesses incorporate in Delaware—Delaware law provides significant assistance to officers and directors who are named in legal proceedings connected to their corporate role. Delaware courts don’t hesitate to uphold this protection when circumstances warrant. And in Horne v. OptimisCorp, the Delaware courts again vindicated an officer’s broad rights to indemnification under Delaware law.

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  • In the case filed earlier this year in federal court in Virginia by spinal implant seller DePuy Synthes Sales, Inc. against two former employees and their current employer, DePuy’s competitor Sky Surgical, Inc., DePuy claims that Sky Surgical and the former employees conspired to breach the fiduciary duties that the former employees owed to DePuy by selling spinal implants to DePuy’s customers after they left DePuy.  (DePuy also claims that Sky Surgical tortiously interfered with the former employees’ non-competes – the subject of our post on Tuesday.)  We may think that quitting a company means quitting fiduciary duties, so that anything that the two former employees did after they left DePuy could not be breaching a duty to DePuy.   But it’s not that simple.  Not in Virginia, anyway.

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  • 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.
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  • When a dispute between executive and company reaches the point of litigation, usually the executive’s title begins with “former.”  But not always.  Sometimes litigation proceeds while the executive remains an officer or director of the company.  How does the executive’s fiduciary duty to the company affect her litigation strategy and conduct?

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  • On Thursday, a 4-3 majority of the Virginia Supreme Court held in VanBuren v. Grubb that individuals such as supervisors or managers could be sued as individuals and held personally liable for the common law tort of wrongful termination (also known as wrongful discharge) in addition to whatever corporate liability the employer may have.

    As a practical matter, this gives plaintiffs and their lawyers additional leverage when bringing suits that contain a cause of action for wrongful termination in Virginia by being able to name the former employee’s boss as a co-defendant.  From the boss's perspective, this decision means that you, personally, could be named as a defendant and ultimately forced to satisfy a judgment for improperly firing an employee from your own pockets -- not just your company's.  It also means that employers and their executives who operate in Virginia need to review their D&O insurance coverage with this potential exposure in mind.

    In short:  whether you're an executive or an employer, you need to know about this case and its implications on the employment relationship.

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  • The world’s largest wind turbine company, Vestas Wind Systems A/S, recently terminated its former CFO’s severance agreement after it discovered that he entered into unauthorized deals in India.  When Vestas announced its termination of its Henrik Noerremark’s severance agreement, it said that his unauthorized contracts cost the company about 18 million euros and that it is seeking to void the deals.  The company said it was also considering whether to bring claims against Noerremark.

    What kinds of claims might Vestas pursue? 

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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.

Contributing Editors
John J. Connolly

John J. Connolly
Email | +1 410.949.1149


Andrew N. Goldfarb
Email | +1 202.778.1822

Sara Alpert Lawson_listing

Sara Alpert Lawson
Email | +1 410.949.1181

Nicholas DiCarlo

Nicholas M. DiCarlo
Email | +1 202.778.1835