Responding to an EEOC Charge

Originally published by Keith Clouse.

Your company just received a notice from the Equal Employment Opportunity Commission (EEOC) stating that a charge of discrimination and/or harassment has been filed against the company. What do you do next?

First of all, don’t panic. A charge of discrimination is not a conclusive determination that the company violated any laws; rather, it is simply a complaint (usually made by a former or current employee) that the EEOC then investigates. That being said, all EEOC charges should be taken seriously.

Having a company protocol for how to handle and respond to such complaints will go a long way in reducing future legal exposure. The following are some important steps employers should in response to a charge of discrimination and/or harassment.

Review the Charge

Carefully read through the entire charge of discrimination and/or harassment to understand what type of complaint is being made, what employee(s) are allegedly involved, and when the alleged harassment and/or discrimination took place. Next, the company should figure out what it is being asked to do and the deadline that is given for responding to such requests or providing a response to the charge.

Preserve Evidence

All files, documents, emails, etc., relating to the allegations in the charge should be collected and preserved (both hard and electronic/digital copies). If the company has an in-house legal department, they should be informed immediately and may want to issue a company-wide litigation hold, suspending all document deletion until the investigation is complete.

Any automatic email deletion applications or programs on company computers should be turned off. Failing to preserve evidence (whether intentionally or inadvertently) can lead to spoliation issues if litigation ensues. This would mean that the judge or jury is permitted to infer that any deleted or destroyed documents would have been useful to the employee’s claims.

In addition, the EEOC’s recordkeeping regulations obligate companies to keep all employee records for a minimum of one year following any termination of such employee. Thus, companies have an obligation to maintain such records for that time period in the event that a dispute arises surrounding an employee’s termination.

Consider Getting a Lawyer Involved

Companies are not required to be represented by counsel during the EEOC’s investigative process. Many large companies have in-house counsel or human resources-trained professionals who will be able to respond to the EEOC charge. However, depending on how complex the claims are, companies may wish to consult a lawyer, especially if there is high potential for liability.

Typically, if the charging party (the individual who filed the EEOC charge) has an attorney, the company should seek representation by an attorney as well. Even if the company has an in-house legal department, it may be a good idea to hire outside counsel to conduct the workplace investigation, depending on the seriousness of the allegations and the employees involved.

Conduct an Investigation

Prior to drafting a response to the charge of discrimination, the company must conduct an investigation into the charging party’s allegations. Ideally, this investigation would have already occurred if and when the employer was first put on notice of the employee’s complaints via some formal or informal company complaint procedure. However, if the company was unaware of any employee complaints or failed to conduct an investigation prior to receiving the charge, now is the time it must be done.

During the investigation the company should collect documents relevant to the allegations in addition to interviewing key witnesses. The individual conducting the investigation should be an uninvolved, well-trained employee with experience handling internal investigations (or an outside qualified third-party/attorney).

It is important to avoid any perception that the investigator is biased. This investigation should be completed promptly but thoroughly, because any inaccurate information included in a position statement may be used against the company in a future trial.

Respond in a Timely Manner

Do not simply ignore the charge of discrimination – even if the company believes it is patently false or frivolous. Most of the time employers will be asked to respond to the charge of discrimination by providing a position statement to the EEOC, as well as responding to a request for information (RFI).

The position statement is the employer’s opportunity to explain the non-discriminatory or non-retaliatory reasons for taking certain disciplinary or adverse employment actions against the charging party. Companies generally have 30 days to gather documents and submit such responses; an extension may be granted upon request, however.

Employers who wish to seek an extension (i.e. if key witnesses are on vacation or the company needs more time to conduct a full investigation) should promptly do so rather than waiting until the last minute. If the company fails to comply with EEOC requests during the investigation process, the EEOC will likely issue a subpoena for such information. Failing and/or refusing to comply with a subpoena from the EEOC is considered contempt of court and can result in a lawsuit, fines, and even jail time.

When drafting a position statement, keep in mind the facts must be 100% accurate because any discrepancy or changes in position can later be used in court to show that the reasons for taking action against such employee were merely pretext (i.e. a false motive or excuse given to mask the underlying discriminatory intent).

The EEOC provides guidance to employers about what it is looking for in an effective position statement. It is important to remember that the employer’s position statement may be provided to the employee for rebuttal. It is in the employer’s best interest to provide an effective position statement that focuses on the facts, rather than the legal argument.

Employers may also be required to submit a response to an RFI as an attachment to the position statement. In doing so, employers should reply to all questions asked by the EEOC and provide information and documents that are relevant to the allegations in the charge, such as an employee handbook or policies, personnel files (including any write-ups of the complainant employee), etc. The EEOC may also request demographic comparator information from the company regarding employees who were disciplined or terminated for similar behavior.

Consider Mediation

Mediation is an alternative dispute resolution process that gives the parties an opportunity to come to a mutually agreeable resolution with the assistance of a neutral mediator. The EEOC encourages early participation in its mediation program to resolve conflicts. EEOC mediation is completely voluntary. If both parties agree to take part in mediation, a session will be scheduled with a trained mediator who encourages and facilitates settlement discussions.

The mediation program offered by the EEOC is free to the parties and all information disclosed to the mediator is kept confidential and not shared with the EEOC investigator. Generally, EEOC mediation is beneficial to attend because companies can get access to free discovery, it can save the parties a lot of time and money that will be expended if litigation ensues, and it reveals the mindset of the employee.

Employees may be more inclined to settle for a smaller amount of money at the early stages of his or her complaint, before any animosity builds during the contentious litigation process. Thus, in situations where there is a high risk of legal liability based on the evidence, employers should not only attend mediation, but also be prepared to make a reasonable settlement offer during mediation.

Successful mediation results in the charge of discrimination and/or harassment being dismissed, while unsuccessful mediations simply continue through the EEOC investigative process.

Prevent Retaliation

Retaliation against the complaining employee or any other employees who participate in a workplace investigation is illegal. Therefore, if the individual who filed the EEOC charge is still a current employee, employers must ensure that he or she is not subject to any actions that may be perceived as punishment or retaliation for their filing of the charge.

Actions such as giving a negative performance evaluation, transferring the employee to another position, changing his or her work schedule to less desirable hours, or demoting and/or terminating the employee can all be considered unlawful retaliation if such action is taken because the employee participated in the workplace investigation or made a complaint of unlawful workplace practice (e.g. with the EEOC).

Be Patient

As a federal agency, the EEOC is backlogged. Sifting through all of the charges of discrimination and responses is a long, slow process. Per the EEOC’s website, the average time to investigate and resolve a charge is 10 months. Any delay on the part of the company in submitting a position statement or responding to the request for information only prolongs such time estimates.

Settlement discussions are permitted (and encouraged) throughout the EEOC investigative process. However, if mediation and settlement attempts fail, a charging party can request a Right to Sue letter from the EEOC after the EEOC has had 180 days to investigate the charge. Once the EEOC issues a Right to Sue letter, the employee will then have 90 days to file a lawsuit to pursue his or her claims in court.

If the employee decides to do so and the complaint snowballs into a full-blown lawsuit, following the above steps can help reduce a company’s legal exposure during subsequent litigation.

For assistance with workplace discrimination, harassment or retaliation matters, contact Clouse Brown PLLC. Our attorneys are available to counsel employers and business-owners regarding federal and state employment laws and give advice in dealing with employee complaints. We also advise employees who have been discriminated or retaliated against by an employer.

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LinkedIn is Boring – But Lawyers Should Be There Anyway

Originally published by Amy Boardman Hunt.

LinkedIn is the least popular of all the big social media channels, but it’s still considered a must for companies looking for business and individuals looking for work. It’s not hard to see why LinkedIn isn’t popular: it’s technologically clunky and everybody is on their best behavior, so it’s basically a live feed of the […]

The post LinkedIn is Boring – But Lawyers Should Be There Anyway appeared first on Muse Communications.

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Contract Operator Not Liable for Breach of a Unit Operating Agreement

Originally published by Charles Sartain.

Co-author Chance Decker

It’s a tale as old as the oilfield: A non-operator doesn’t pay joint interest billings, operator sues, non-payer claims the expenses were unwarranted and the operator was negligent—no, grossly negligent—for incurring them in the first place. Welcome to OBO, Inc. v. Apache Corporation et al. Despite a creative argument by non-operator OBO that contract operator Apache didn’t have authority to charge JIB’s in the first place, OBO must pay.

The facts

OBO owns a minority working interest in a gas unit in Andrews County, Texas. Permian Basin Joint Venture, LLC owns 81.4% of the working interest in the unit and was designated as the unit operator. The Unit Agreement and Unit Operating Agreement require the operator to be a working interest owner.

PBJV contracted with Apache to serve as contract operator. Apache sent JIB’s, OBO wouldn’t pay, Apache and PBJV sued for the unpaid JIB’s.

The fight

OBO agreed that it didn’t pay the JIB’s. Its defense was that Apache didn’t have authority to issue the JIB’s because Apache was not a working interest owner. Alternatively, if Apache could be operator, it breached the operating agreement and was “grossly negligent” in continuing to spend money on marginal wells. OBO didn’t assert counterclaims against PBJV.

Apache and PBJV argued that the contract services agreement (and power of attorney) between them authorized Apache to send JIB’s, and that Apache operated the unit just fine.

The law

As a general rule all contractual duties—including operator duties under a JOA — can be delegated to someone else. There are exceptions. For example, contracts for personal services (Bill O’Brien can’t delegate his coaching duties with the Texans to another coach, even if Texans fans wish he would), or when delegation is contrary to public policy (a critical government contractor agreement, for example). Unless one of these exceptions applies, or the contract prohibits delegation—and in this case the agreements did not — then delegation is perfectly fine. But you already knew that (and deep down, OBO probably did to), as contract operators are commonplace in the oilfield.

OBO can’t get off the hook

The court of appeal affirmed summary judgment for Apache and PBJV on all counts. OBO was ordered to pay the disputed JIB’s plus interest; its claims against Apache were dismissed.

Breach of contract and gross negligence – wrong target

The problem with these claims was OBO assumed Apache was the operator under the unit agreement. That missed a critical point: When PBJV contracted with Apache for operator services, Apache did not become the operator. Rather, Apache was merely performing operator services for PBJV under a contract with PBJV, not the other working interest owners. If Apache operated the unit negligently or in a manner that breached the unit agreement, the other working interest owners needed to sue PBJV, not Apache. OBO never sued PBJV. Thus, regardless of how Apache operated the unit, OBO’s claims failed because it sued the wrong party.

All this talk of “operations” makes us think of doctors, and more doctors.

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A Burden Shift Within A Burden Shift—An Anti-SLAPP ‘Inception’

Originally published by Daniel Correa.

Christopher Nolan’s ‘Inception’ (2010) leaves the audience guessing at the end whether Dom Cobb, played by Leonardo DiCaprio, is awake and back with his children or still dreaming. Cobb’s spinning top is the focus point. To avoid getting trapped in a deep-dream state after trekking through another person’s sub-sub-subconscious, Cobb spins his top. If it falls after a short spin, he is awake; if it keeps spinning, he is dreaming. The film ends with Cobb spinning his top, as he eagerly eyes his children, and then impatiently running toward his children before he verifies whether the top falls or continuously spins. The camera focuses on the top. It tilts. It tilts again. Then the film ends. Is Cobb stuck in a dream within a dream? Has he traveled too far into someone else’s sub-sub-subconscious, unable to “pop” back to the beginning, back to his own reality?

The Austin Court of Appeals recently dealt with a far less metaphysical, but no less abstract situation in Texas Jewelers Association, et al. v. Ann Glynn. The court was tasked with deciding the following question: Who shoulders the burden to prove “actual malice” in a qualified privilege defense to a defamation claim when Texas Civil Practice & Remedies Code § 27.005(d) applies?

Section 27.005(d) addresses the burden shift after the burden shift after the initial burden that takes place in an Anti-SLAPP Motion to Dismiss. The movant under Chapter 27 bears the burden to prove by a preponderance of the evidence that Chapter 27 applies. See Tex. Civ. Prac. & Rem. Code § 27.005(b). If the movant sustains its burden, then the burden shifts to the nonmovant to establish by clear and specific evidence a prima facie case for each essential element to its claim. Id. at § 27.005(c). If the nonmovant sustains its burden, then the court may not dismiss the claim unless (here comes the burden shift) the movant establishes by a preponderance of the evidence each essential element of a defense to the nonmovant’s claim. Id. at § 27.005(d).

But when an affirmative defense includes a burden shift, does Section 27.005(d) cancel out that burden shift? The Austin Court of Appeals did not definitively answer this question. So we are left with a teetering spinning top situation. But law, unlike cinema, cannot keep its audience guessing at the answer. Fortunately, the court’s opinion provides some guidance on how the question might be answered.

Texas Jewelers Association

Ann Glynn (plaintiff) sued Texas Jewelers Association and its President (Brad Koen) and Treasurer (Rex Solomon) for tortious interference with an existing contract and defamation, among other causes of action. Glynn resigned as Executive Director from Texas Jewelers Association in 2016, following allegations that funds were missing from the Association’s accounts. In her suit, Glynn alleged that Koen and Solomon engaged in efforts to build a case against her for misuse of association funds.

The Defendants filed a Motion to Dismiss pursuant to Chapter 27. Glynn conceded that Chapter 27 applied, but argued that she established by clear and specific evidence each element to her causes of action. The trial court granted the defendants motion to dismiss in part, but denied the motion as to the plaintiff’s tortious interference and defamation claims.

The court of appeals reversed the trial court’s ruling on the plaintiff’s tortious interference claim and her defamation claim against Koen, but affirmed the trial court’s ruling on the plaintiff’s defamation claim against Solomon. With respect to her defamation claims against Koen, the court held that Glynn failed to provide proof that Koen published any defamatory statement about Glynn. Glynn attributed every alleged defamatory statement to Solomon. As a result, she did not prove by clear and specific evidence the element of “publication” as to Koen.

The court found, on the other hand, that Glynn sustained her burden to prove by clear and specific evidence each element to her defamation claim against Solomon. Relying on section 27.00(d), Solomon argued that the trial court erred in denying his motion to dismiss Glynn’s defamation claim because Solomon proved by a preponderance of the evidence each essential element to his qualified privilege defense.

The court acknowledged that the qualified privilege defense includes a burden shift. The defendant bears the burden to prove the qualified privilege attaches to the communications at issue. The privilege attaches to a communication that is “made in good faith and the author, the recipient or a third-person, or one of their family members, has an interest that is sufficiently affected by the communication.” Once the defendant proves the privilege attaches to the communication at issue, then “the burden shifts to the plaintiff to prove that the defendant made the statements with actual malice.”

Notwithstanding the burden shift to the qualified privilege defense, the parties assumed and did not contest that the defendant/movant bears the burden to prove lack of malice. The court of appeals reasoned: “Neither party contests this approach, so we will address the case as the parties litigated it in the court below. Cf. Alamo Heights Indep. Sch. Dist. V. Clark, 544 S.W.3d 755, 783 (Tex. 2018) (applying causation standard advocated by both parties without deciding whether standard was correct).” The court found that Solomon did not sustain his burden to prove lack of malice by a preponderance of the evidence and, as a result, affirmed the trial court’s denial of Solomon’s motion to dismiss Glynn’s defamation claim against him.

What is the Correct Standard?

The court of appeals made an interesting decision to forego articulating the correct standard to apply under section 27.005(d) to an affirmative defense with a burden-shifting component. Courts of appeal review de novo “whether each party has met its respective burden under the Act’s . . . dismissal mechanism.” Grant v. Pivot Technology Solutions, Ltd., 2018 WL 3677634 *3 (Tex. App.—Austin Aug. 3, 2018). One might think that looking “brand new” at the issue concerning the parties’ respective burdens under Chapter 27 would include looking “brand new” at whether the correct standard was applied by the court below. Of course, if the parties did not sufficiently brief the issue for the court to ascertain the correct standard, maybe the court does best by going with the standard assumed by the parties. But what if the parties are wrong on the standard?

The Austin Court of Appeals supported with a Cf. citation its decision to side step determining the correct standard. “Cf.” is short for compare. The Bluebook informs law students and legal practitioners that “cf.” denotes the cited authority may not expressly (or even obviously) support the stated proposition. Black’s Law Dictionary defines “cf.” as “a citation signal [that] directs the reader’s attention to another authority or section of the work in which contrasting, analogous, or explanatory statements may be found.” (243). The Texas Jewelers Association court asks the reader to compare its decision to apply the standard assumed by the parties with the Texas Supreme Court’s decision in Alamo Heights Independent School District v. Clark, 544 S.W.3d 755 (2018):

Clark asserts a factual dispute exists regarding motivation by sexual desire under Oncale’s first evidentiary route. As a predicate matter, the parties disagree about whether “credible evidence” that the harasser is homosexual is required. Some courts have treated Oncale’s “credible evidence” of homosexuality language as imposing a mandatory requirement of such evidence in every first-route evidentiary case. Other courts have determined this route requires only proof of motivation by sexual desire, which may be shown by any relevant evidence, including—but not limited to—sexual propositions combined with “credible evidence” that the harasser is homosexual. We need not determine which approach is correct because, under either, the evidence is lacking.

There are notable differences between the Texas Jewelers Association issue and the Alamo Heights issue. While both the Texas Jewelers Association and Alamo Heights decisions side-stepped a question of law, to whom the burden of proof falls in the former case and the quality and type of evidence required in the latter case, the Alamo Heights court declined to select “the correct approach” because under either approach the evidence was lacking. The Alamo Heights Court may have been adhering to “the cardinal principle of judicial restraint—if it is not necessary to decide more, it is necessary not to decide more.” PDK Labs, Inc. v. U.S. Drug Enforcement Admin., 362 F.3d 786, 799 (D.C. Cir. 2004) (Roberts, J., concurring). The Texas Jewelers Association court, however, did not side-step the burden of proof issue because the result would be the same whether the movant or nonmovant bore the burden to prove actual malice; rather, the court side-stepped the issue because the parties assumed the burden fell on the defendant/movant. Notably, the result could have been different in Texas Jewelers Association if the burden shifted to the plaintiff/nonmovant to prove actual malice because, arguably, section 27.005(c) would apply and the nonmovant would need to prove actual malice by clear and specific evidence, not merely by a preponderance of the evidence—more on this point below.

So what is the correct standard? I propose three ways to approach this question. First, look at the qualified privilege defense to determine if “actual” malice” is or should be treated as an element of the defense or something else. Second, look at the difference between a summary judgment, which places the burden on the movant, and a motion to dismiss. Third, consider the purpose of Chapter 27. Although I will not go into much detail here, a sketch of these three inquiries reveals possible answers to our inquiry.

First, qualified privilege as an affirmative defense against defamation claims serves to safeguard free speech. See Burbage v. Burbage, 447 S.W.3d 249, 254 (Tex. 2014). The privilege itself requires only a showing by the defendant that the communication at issue was “made in good faith and the author, the recipient or a third-person, or one of their family members, has an interest that is sufficiently affected by the communication.” Id. In one sense, once the privilege attaches, it is no different than the privilege attached to a public figure in a defamation case, making “actual malice” part of the plaintiff’s prima facie case. In fact, the Texas Supreme Court included the qualified privilege within the protections afforded in New York Times Co. v. Sullivan:

The New York Times definition of actual malice which this Court applied in El Paso Times is likewise applicable in the instance case, all three cases being libel suits, all three cases involving publishers’ privileges and all three cases requiring malice to overcome the privileges.

Dun & Bradstreet, Inc. v. O’Neil, 456 S.W.2d 896, 900 (Tex. 1970) (citing El Paso Times, Inc. v. Trexler, 447 S.W.2d 403 (Tex. 1969) and New York Times Co. v. Sullivan, 376 U.S. 254 (1964)). Under this scheme, is “actual malice” an element of the qualified privilege defense? If not, then, based on a plain reading of Texas Civil Practice & Remedies Code § 27.005(d), one might argue that the movant does not bear the burden to prove lack of malice. Cf. Goodman v. Gallerano, 695 S.W.2d 286, 287 (Tex. App.—Dallas 1985, no writ.) (“To assert that a defamation is qualifiedly privileged is an affirmative defense that is available only if evidence shows that the communication was made in good faith and without actual malice.”).

Second, the Texas Jewelers Association court compared the standard assumed by the parties to the standard applied in the summary judgment context. The summary judgment movant always bears the burden to prove the absence of a genuine issue of material fact. When relying on a defense, it is the summary judgment movant’s burden to conclusively prove every element of its defense. Whether “actual malice” is considered an element (stated in the negative) of the movant’s defense or as part of the plaintiff’s prima facie case (stated in the affirmative) once the privilege attaches does not change the fact that the movant bears the burden to demonstrate the absence of a genuine issue of material fact on the actual malice issue; that is, whether it is part of the defense or part of plaintiff’s prima facie case, the summary judgment movant must conclusively negate actual malice—once the movant demonstrates the privilege attaches, the only issue remaining on the defamation action is whether the statement was made with actual malice. Chapter 27 does not operate the same way. It does not require the movant to prove, as a matter of law, every element to its affirmative defense or disprove the facts of at least one of the elements, or the only remaining element, to the nonmovant’s claim or defense. How, if at all, do the difference between a summary judgment motion and Chapter 27 motion to dismiss inform the inquiry into how the burden of proof should be distributed on a defendant’s qualified privilege defense under section 27.005(d)?

Third, consider Chapter 27’s stated purpose:

The purpose of this chapter is to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury.

Tex. Civ. Prac. & Rem. Code § 27.002.

The burden-shifting mechanism in Chapter 27 is designed to promote Chapter 27’s stated purpose. The movant must first demonstrate that Chapter 27 applies, that is, that the legal action is based on, related to, or in response to the movant’s exercise of one of the enumerated First Amendment rights. The burden then shifts to the nonmovant to demonstrate a meritorious claim. If the nonmovant sustains its burden, then the burden shifts again to the movant to prove the elements of a defense to the nonmovant’s claim. This third shift is important to our inquiry here. It affords the movant another opportunity to demonstrate that his, her, or its First Amendment rights are undermined by an unmeritorious claim. Is the purpose of Chapter 27 undermined or otherwise thwarted if section 27.005(d) requires the movant to prove the negative of an element (actual malice) that by law the nonmovant must prove?

Tilt. Tilt. End.

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Void, is void.

Originally published by David Coale.

The appellant in In re Knies challenged an order about an award of attorneys’ fees in connection with a discovery matter, entered four months after the trial court’s plenary power expired. The Fifth Court found that it had no jurisdiction over this void order, reasoning: “Judicial action taken after the expiration of the court’s jurisdiction is a nullity, and any orders signed outside the court’s plenary jurisdiction are void. We have no jurisdiction to consider the merits of an appeal from a void order.” (citation omitted). (Of course, in reaching that conclusion, the Court necessarily held that the order was void, which is basically the relief appellant was requesting by a different path.) No. 06-18-00919-CV (Oct. 30, 2018) (mem. op).

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An Employer’s Spooky Interpretation of its Bring Your Own Device (BYOD) Policy

Originally published by Drew York.

Mark Eting is one of Duncey’s Caps top outside sales agents. Because the company is based in Texas, but Mark lives in Cleveland and sells for the company in the northeast, Mark purchased a personal computer and a laptop to use for work purposes, but did not get reimbursed by the company. He did, however, provide the computer to Duncey’s IT department to install the company’s sales tracking program. Unbeknownst to Mark, the IT department also installed software that allowed the company to determine when Mark accessed the sales tracking program and what information he accessed. Duncey’s employee handbook – which Mark acknowledged – stated the company could monitor his use and access of company data on personal devices. For the laptop, Mark purchased software called “LogMeIn” which allowed him to remotely access the home personal computer while he was on the road. Thus, Mark could use his laptop while traveling, access the home computer, and enter the sales data. At a team sales retreat, Mark casually mentioned to his boss, Tom Prior, how he logged his sales data on the road by using LogMeIn.    

When Mark quit, Duncey’s IT department investigated his use of the sales program, and found he had been logged in more than usual. Suspicious of this activity, Tom went into LogMeIn and successfully guessed his username and password. While perusing Mark’s personal computer, Tom found Mark had set up a Google Mail account and was emailing Duncey’s customer information to one of its competitors. Duncey filed suit against Mark for various claims. When Mark read the lawsuit’s allegations, he realized the only way Duncey’s learned that information would have been by accessing his personal computer or laptop. Mark fired off a counterclaim for computer hacking. Does Mark’s claim stand a chance?  

Cybersecurity Risks with BYOD Policies

Companies are increasingly allowing employees to bring their own devices to work – typically in the form of smartphones that allow the employee to access work emails. But in some instances, especially with small companies or those that allow their employees to work remotely, employees also use their personal laptops or computers for work purposes.

While the ability to bring your own device provides employees with more flexibility – and also makes them more productive – there are several risks. There are potential cybersecurity threats to the company’s data when the employee’s home network or wifi fails to have sufficient security, or when the employee’s device is lost or stolen. Companies also risk that unscrupulous employees who are fired, or who suddenly resign, will attempt unauthorized access to the company’s proprietary information.

BYOD Policies Typically Give Employers Unfettered Access

Most company BYOD policies give employers the right to monitor what information an employee is accessing on their personal devices. This may even include an employee’s use of personal email accounts on devices that are also being used for work purposes. But some employers are going farther. A new lawsuit between an investment firm and one of its former managers is testing the limits to which employers can legally “hack” an employee’s device that is used for work purposes. Although the company provided the employee with the computer to use at home for work purposes, the employee was also using it for personal reasons. When the employee left over compensation issues, the company guessed his LogMeIn account password and accessed his personal email account, as well as information he had stored on personal hard drives. The employee sued for violations of federal anti-hacking laws. In response to the lawsuit, the company claimed that its employee handbook authorized the company to access and monitor all electronic documents stored or processed on its computers, including those “which don’t directly relate to [the company’s] business.”

Tilting the Scales in Your Favor

While BYOD policies typically provide companies with very broad rights, it’s hard to imagine that the investment firm’s BYOD policy would allow the company to “hack” into the employee’s computer remotely by guessing his password. The better course of action would have been for the investment firm to demand the employee return the computer immediately. If he failed to do so there likely would have been good grounds for a temporary restraining order and temporary injunction.

 

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Texas Couple Indicted for Allegedly Embezzling $14.5M from Retirement Funds

Originally published by P. Clarkson Collins Jr..

In Texas, a federal grand jury has indicted a couple accused of embezzling $14.5M dollars from the retirement plans that they oversaw. Wendy Richie and Jeffrey Richie co-own Vantage Benefits Administrator, which acted as a third party administrator for many retirement funds, including 401(K) plans. According to the US Attorney’s Office for the Northern District of Texas, the couple misappropriated money from “at least 1,000 plan participants in at least 20 employer retirement plans.”

The indictment against the couple alleges that Wendy Richie:

• Posed as a number of different beneficiaries.
• Turned in fraudulent distribution requests to Matrix Trust Co., which is a retirement fund custodian, while pretending to be those beneficiaries.
• Rather than transferring the funds into the beneficiaries’ accounts, deposited the money into Vantage’s operations account.

Wendy and Jeffrey then allegedly used the money for the company’s payroll and operating costs, as well as to pay for their own expenses, including home decor, mortgage payments, escrow payments, and farming equipment. Now, they face criminal charges for conspiracy, wire fraud, theft from an employee benefit plan, and aggravated identity theft. The Richies could end up spending up to 81 years behind bars.

Aside from the criminal charges, the couple and their company are named in investor fraud complaints. MBA Engineering has filed a complaint on behalf of its cash balance and 401(K) plans accusing Vantage Benefits of stealing nearly $2.3M in from about 20 retirement plans through at least 35 fraudulent transfers conducted by Matrix Trust. The retirement fund custodian, which is also a defendant in the case, allegedly never notified the plaintiffs that the transfers occurred nor were these transactions authorized.

MBA Engineering, which is an electrical engineering firm, is alleging the use of bogus participant names and fake Social Security numbers. PlanSponsor reports that the plaintiff also believes that Matrix made over $11M in “similar transfers” to the third party administrator that involved about 20 other retirement plans.

Meantime, two 403(B) plan participants are suing Matrix Trust Co. on behalf of themselves and other 403(b) plan participants that were similarly affected. Matrix Trust allegedly made at least $3M in unauthorized transactions to a Bank of America (BAC) account that Vantage Benefits controlled. A 403(b) plan is a retirement savings plan for non-profit employees, public school employees, certain kinds of ministries, and other tax-exempt groups.

Earlier this year, a default judgment was issued against Vantage Benefits and Jeffrey in a fraud case brought by Caldwell and Partners, Inc. for its 401(k) plan. Jeffrey and his company were ordered to pay back over $10M in damages, with interest, to the plan, as well as nearly $300K in legal fees.

Texas Investor Fraud Lawyers—SSEK Law
At Shepherd Smith Edwards and Kantas, LLP, our Texas skilled retirement losses lawyers work with investors that have sustained losses to their retirement or savings funds due to retirement plan mismanagement, negligent, theft, or fraud. Contact our securities law firm today and ask for your free, no obligation case assessment. SSEK Law also represents retirement fund investors and retirees throughout the US.

Couple Indicted For Embezzling $14.5 Million from Retirement Funds, Justice.gov, October 24, 2018

Read MBA Engineering’s Complaint (PDF)

Read the Judgment in the Caldwell Case (PDF)

The post Texas Couple Indicted for Allegedly Embezzling $14.5M from Retirement Funds appeared first on Securities Fraud Attorney.

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Litigator of the Week: El Paso Lawyer Wins $2.5M Verdict in Exploding Tire Case

Originally published by John Council.

 

Sam Legate recently convinced an Arkansas state jury that his independent tire shop owner client Michael R. Snyder did nothing wrong when a Chinese-made tire exploded on him during the mounting process, winning him $2.5 million in damages.
      

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Houston Finishes Comments On Hurricane Harvey Recovery Plans

Originally published by Adrianna Zampieri.

For victims of Hurricane Harvey, recovery remains an ongoing process. Homes that were inundated with floodwaters are still in the process of being rebuilt, and property owners are still looking for answers from the city about how the flooding happened. Although recovery has been slow, one huge step has been completed as the city of Houston and Harris County complete a comment period on Hurricane Harvey Recovery plans.

There are currently plans to use approximately $2.3 billion in federal housing funds to help residents affected by Hurricane Harvey. The city of Houston will use $1.1 billion for recovery, and Harris County will use the remaining $1.2 million. These plans still need to be approved by the federal government, but once in place, the plans will provide the necessary funds for Houston to recover.

How The Money Will Be Utilized

Harris County has released a proposal for how the $1.2 billion will be used for recovery and prevention. The County’s proposal includes:

• $222 million for an affordable rent program
• $211 million for the Harris County Homeowner Assistance Program
• $209 million in local infrastructure improvements
• $200 million for home buyouts
• $115 million for new single-family home construction
• $55 million for local planning
• $16 million in program administration cos
• $15 million for a homeowner reimbursement program
• $7.5 million for a homelessness prevention program

The City of Houston focused its proposal on rebuilding homes, and has divided its $1.1 billion accordingly:

• $600 million for repairing or building single family homes
• $375 million for repairing or building apartments

Unanswered Questions From Hurricane Harvey Victims

While federal aid will help the city rebuild and recover, the proposals don’t address the unanswered questions from the thousands of property owners affected by the Addicks and Barker reservoir releases. Many property owners learned their homes were built in a floodplain only once Hurricane Harvey’s rainfall caused their homes to flood. Homeowners downstream of the reservoirs also want to know how the U.S. Army Corps of Engineers will compensate them for homes destroyed by the Army Corps’ decision to begin controlled releases from the Addicks and Barker reservoirs.

Getting Help After Flooding

Raizner Law is currently helping victims of the Addicks and Barker reservoirs flooding in lawsuits against the U.S. Army Corps of Engineers. If your home was flooded by the reservoirs, contact us today to see how we can help.

The post Houston Finishes Comments On Hurricane Harvey Recovery Plans appeared first on Raizner Slania LLP.

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Court Affirms Judgment that Power-Of-Attorney Holder Converted Funds by Withdrawing them from a Joint Account

Originally published by Gerry W. Beyer.

A Texas appeals court affirmed the decision of the lower Fort Worth court, finding that a brother used his power-of-attorney given to him by his brother (the decedent) to wrongfully exercise dominion and control over the money in a joint…

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(From the Archive) Mike Maslanka @ Your Desk: Halloween

Originally published by Teri Rodriguez.

Mike Maslanka reflects on Halloween, Day of the Dead, and Shakespeare’s Hamlet – in the latest installment of Mike Maslanka & Your Desk, a video series presented by the State Bar of Texas on its YouTube channel, Texas Bar TV

View other installments of Mike Maslanka @ Your Desk

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Blockchain and Its Legal Implications for Banking

Originally published by Michael Holmes.

 

Blockchain is far more than Bitcoin and presents a unique set of legal hurdles for the banking sector.What is Blockchain?Blockchain is a method
      

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Chen’s Noodle House – Rediscovering a Hidden Gem

Originally published by Optimista.

In this town burgeoning with hot new restaurants, it’s easy to forget the tried and true favorites that deserve our support. We recently revisited Chen’s Noodle House after much too long an absence, and while I’m delighted to report that it was even better than I remembered it, I also felt a pang of regret for not having patronized them more often.

If you haven’t been to Chen’s, it’s a VERY unassuming hole-in-the-wall in a pretty divey strip center near 183 and Spicewood Springs Road. Chen’s is so on the down low that when we were there recently, there was absolutely no signage to be found on the exterior of the restaurant. I neglected to snap a photo of the storefront to share with you, but if you’re facing Asia Market (which seems to be closed at the moment), Chen’s is to your left.

You order at the counter and serve yourself silverware, napkins, and tiny cups of tepid tap water. And then the food comes out and you’re reminded of why you came.

These lamb skewers ($9) were some of the finest specimens of lamb I’ve ever tasted. They were impeccably seasoned and so tender. I really wanted another order of these, but as you’ll see in a moment, we had already ordered too much food.

These fried dumplings ($10) came out next. Super tasty.

I’m looking at the online menu right now, and I think these sesame pockets were only $8. Which confounds me, because they were substantial enough that I think four light eaters could make an entire meal out of them. They were generously stuffed with flavorful pork, and pockets were soft and came out warm. The sesame seeds added a nice crunch and toasty goodness.

My combination noodle soup ($9) was the stuff cold days were made for. My friend suggested that I add a sauce called jia jiang to it, as well as a healthy dollop of their wonderful house-made hot oil. The noodles are handmade. How do they even sell this for $9? The bowl was gigantic. You can see the soup spoon on the bottom right, dwarfed by the massive bowl.

We were so sated and happy as we walked out of Chen’s, and vowed loudly not to wait so long before returning for another visit. I hope you follow suit – I know you’ll be happy you did.
 
Chen’s Noodle House
8650 Spicewood Springs, Suite 127
Austin, TX 78759
512-336-8889

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Gilstrap Decision on Google Venue Will Stand, at Least for Now

Originally published by Scott Graham.

 

The judge’s decision finding Google’s servers constitute a “regular and established place of business” doesn’t warrant mandamus review, the Federal Circuit held. A dissenting judge warned of “far-reaching consequences” for internet businesses.
      

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Stranger Things, Indeed

Originally published by John G. Browning.

 

Friends of mine have been urging me to binge watch the hugely popular Netflix science fiction drama “Stranger Things, assuming that the show’s
      

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Combating Common FLSA Mistakes

Originally published by Carrie Hoffman.

 

Texas employers should beware. If they haven’t been subject to a Department of Labor audit and/or a lawsuit alleging that employees were denied or
      

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Protecting Your Store’s “Look” With a Design Patent

Originally published by Austin TX Business Law Blog.

What elements of a store’s design can be protected through a design patent?

The look and feel of your retail location are likely a driving factor behind your success.  Customers often come to a certain store, over competing options, because they know and appreciate the overall style of the store. Your “look” might include your arrangement of items for sale or services, a unique display, a signature floor design, and much more.  Retailers often miss out on protecting the design of their store because they are unaware intellectual property law could give them much needed legal protection.  A design patent can be the ideal tool for some retail owners to guard their unique design and prevent copycats.

Utility vs. Design Patent

When most of us think of patents, we conjure an image of the traditional utility patent. Utility patents are the most common form of patents and they protect the way something works.  These patents are often issued for novel new inventions, software creations, and the like.  However, utility patents are not the sole type of patent.  Design patents are less known, but offer critical protection for the way something looks, as opposed to how it works.  To achieve protection, the design must simply be new in appearance.

Design patents are easier to apply for, cheaper, and faster.  If you are granted a design patent, it will allow you to stop others from using a design protected per the patent.  Your design patent application will need images of the design along with descriptors, but it is far less tedious than a utility patent.  It is considered important to file for one as soon as possible before the design has been disclosed to the public.

Protections Afforded by a Design Patent

Design patents can cover a broad array of designs that may be included in a retail store.  Design patents could, for instance, cover the building itself, items from the interior of the store, fixtures within the store, and other like portions of the store.  The only limitation is that you must be able to depict the design clearly within the application.  To fully protect the look of your store, you may in fact need to file a few design patents.  By protecting the aspects of your store that most contribute to its look and feel, you can best guard your store against competitors who may attempt to copy your unique look.

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Termination Of An MBE Can Lead To Liability

Originally published by Douglas A. Darch and Emily Harbison.

Government contractors are familiar with the obligation to retain minority or women-owned businesses as subcontractors to obtain government work. Increasingly, apex private sector businesses require participation by minority or women-owned businesses as a condition of obtaining work, as well.

A recent decision by the federal court for the Southern District of New York is a cautionary tale, and highlights the care required when terminating a minority business enterprise (MBE) sub-contractor. Annuity Funds Operating Engineers Local 15 v. Tightseal, No. 17-CV-3670 (S.D.N.Y. August 14, 2018).

 

Annuity Funds Operating Engineers Local 15 v. Tightseal

The case arose after Jadlau, the general contractor on the Queens Midtown Tunnel Rehabilitation Project, terminated one of its MBE subcontractors, Tightseal Construction. The subcontract between Jadlau and Tightseal provided that Jadlau would withhold contributions due to various union sponsored fringe benefit funds and pay them. Allegedly, at some point, Jadlau ceased payments to these funds. After Jadlau terminated Tightseal, the union funds sued Tightseal to collect the delinquent contributions. Tightseal and its CEO then sued Jadlau under 42 U.S.C. Section 1981 (part of the Civil Rights Act of 1866) claiming Jadlau had terminated the subcontract in “bad faith.” Specifically, Tightseal and its CEO claimed that Jadlau’s termination of the subcontract was due to racial animus. It should be noted that the punitive damages which can be awarded under Section 1981 are uncapped, making claims under this statue more potent than Title VII claims.

Jadlau moved to dismiss the (third-party) complaint filed by Tightseal and its CEO. The court granted Jadlau’s motion as to Tightseal’s CEO but denied motion as to Tightseal. The district court found Tightseal’s CEO’s section 1981 claim failed because he was not a party to the subcontract between Tightseal and Jadlau. As the court explained, the Supreme Court had already concluded a “shareholder and contracting officer of a corporation has no rights and is exposed to no liability under the corporation’s contracts,” quoting Domino’s Pizza v. McDonald, 546, U.S. 470, 477 (2006). The district court noted that the CEO had not alleged he was the third-party beneficiary of the subcontract, or that Jadlau had the actual ability to interfere with the formation of any contracts between the CEO and any other party, both of which are alternative theories of liability under Section 1981. Accordingly, the court dismissed his claim.

The district court, however, determined Tightseal could bring a claim under Section 1981 because it was a party to the subcontract with Jadlau. Tightseal alleged it was a “disadvantaged African-American Company” and that Jadlau had “subjected it to race discrimination.” The court found this allegation was sufficient to state a claim under Section 1981 because Tightseal alleged that Jadlau’s superintendents had subjected its CEO to racial harassment by calling him racist names and using racial slurs when addressing him. The case will now proceed to discovery and a likely trial absent a settlement.

The decision highlights several important lessons for contractors to keep in mind.

• First, the obligation to avoid racial harassment extends beyond the employees in one’s own workforce.
• Second, general contractors should establish a complaint process or ombudsman system for subcontractors that mirrors the internal harassment complaint procedure for their own employees. A complaint procedure for subcontractors and other vendors may not preclude dissatisfied subcontractors but it may avoid unnecessary litigation.
• Third, it is important to carefully draft the terms of the subcontract so as to avoid third party beneficiary claims.

For more, please reach out to your Baker McKenzie lawyer.

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