Schlumberger is Sanctioned for Lawsuit Against Former Employee

 

 

 

We are seeing more and more lawsuits against an employee after s/he leaves an employer. Some of these suits have basis, some do not. In Schlumberger v. Rutherford, we see a lawsuit that lacked basis. Charlotte Rutherford was employed by Schlumberger as an in-house lawyer. She was privy to confidential, proprietary information in that capacity. She was the Chief of Intellectual Property Counsel when she left. Schlumberger is one of the largest companies providing technical services to the oil and gas industry. It holds numerous patents on a variety of devices. Ms. Rutherford left with positive performance evaluations.

She went to work for Acacia Research Corporation in May, 2013. Acacia, said Schlumberger, was a patent troll. It created nothing, but instead tried to make a claim for various patents so as to garner an easy settlement. Ms. Rutherford countered that Acacia was a patent licensing firm. Ms. Rutherford left on good terms. The Schlumberger General Counsel even referred one client to Ms. Rutherford after she left Schlumberger. 

Schlumberger filed its suit against Ms. Rutherford in March, 2014. This was apparently prompted by a lawsuit by Dynamic 3D against Schlumberger in February, 2014. Dynamic 3D is a subsidiary of Acacia. 

The court awarded Ms. Rutherford $350,00 in attorney's fees and $250,00 in sanctions. 

In its suit, Schlumberger alleged that Ms. Rutherford downloaded confidential information from her work computer. In the Petition, it claimed that she inserted some ten thumb drives into her computer in her last few weeks at the firm. It claimed that she connected a backup external drive to her computer for the first time ever shortly before she left. It accused her of not retriunng the external hard drive and of not returning the thumb drives upon her departure. The firm did not point to any specific information which she allegedly took. It did not even mention in its Petition that she went to work for Acacia. The former employer accused her of breach of fiduciary duty, conversion, misappropriation of trade secrets, breach of contract, and violation of the Texas Theft Liability Act. The company was trying to squeeze in every possible theory of recovery. 

The former employer asked for a Temporary Restraining Order. It specifically asked that the TRO be granted ex parte (i.e., without notifying Ms. Rutherford herself). The firm obtained a TRO prohibiting the former Intellectual Property Counsel from using her information. Once, the former counsel learned of the TRO, Schlumberger then voluntarily dissolved the TRO. In effect, the former employer took actions designed to attract attention, so as to scare off other employers or entities based on nothing more than sham affidavits.

Ms. Rutherford moved to dismiss based on Strategic Lawsuits Against Public Participation (SLAPP), known in Texas as Texas Citizens Participation Act, Tex.Civ.Pra. & Rem. Code, §27.001-.011. 

The Acacia lawsuit was apparently based on publicly available information, but Schlumberger assumed Acacia used information from Ms. Rutherford. The court granted Ms. Rutherford's motion to dismiss, apparently finding that Schlumberger's investigation of Ms. Rutherford's actions was simply very superficial. The Defednant also presented evidence that Schlumberger fabricated or greatly exaggerated facts regarding her supposed attempt to download confidential information. The ten thumb drives was based on an affidavit by the administrative assistant. But, when the administrative assistant was deposed, she testified she could not remember how many thumb drives Ms. Rutherford asked for.

The alleged change in backing up turned out to not be true. Ms. Rutherford actually started backing up her data on an external had drive two years before she left Schlumberger. The company claimed she left after receiving a poor performance evaluation. But, in fact, her last evaluation received the highest rating possible. 

The company pointed to an affidavit by an IT technician claiming that Ms. Rutherford had transferred ten gigabytes of data from her computer to an external hard drive. But, the same IT technician, however, testified in his deposition that nothing was transferred. 

Schlumberger claimed the devices were missing. Yet, the IT technician testified that he never looked for the supposed ten thumb drives or the missing external hard drive. he said no one ever asked him to look for the devices. He testified that he found nothing suspicious about Mr. Rutherford's backing up. He considered it to be routine. And, the company could not point to any specific information which allegedly emanated form the former Chief Intellectual property Counsel. 

The Defendant also pointed to a prior case in which Schlumberger was sanctioned for another lawsuit against a former employee. 

If Ms. Rutherford did not assist Acacia with its lawsuit, what right was being infringed upon by the Schlumberger lawsuit. The Texas version of SLAPP accords protection regarding the freedom to associate and to petition. Ms. Rutherford is free to associate with those who she chooses. And, if she chooses, she is free to petition for a court for redress against those who cause her harm. If such lawsuits could occur, then the future Rutherfords will avoid working for certain employers. The future Rutherfords will find their employment opportunities very constrained.  

Schlumberger tried to scare off Acacia and Ms. Rutherford. In the end, they have been scared off. Too many of those TRO lawsuits work their evil with impunity. This time, the former employer lost. The former employer has filed an appeal. But, the facts of the case cannot now be changed.  

"Fix the Court" Does not Want a True Fix

 

 

 

 

As a country, most of us subscribe to certain precepts. These certain precepts keep things running in our country. One of those precepts is that the U.S. Supreme Court is the final arbiter of constitutional issues. Over the last couple of centuries, most of us have come to accept that Supreme Court's role in deciding those "big" issues. That was not always true. Through the 1850's or longer, many government officials would take it upon themselves to judge the constitutionality or rightness of federal laws. Now, universally, we wait for the Unied States Supreme Court to resolve the big disputes. The decision in Roe v. Wade rocked that precept as much as any decision has. But, still, most U.S. citizens do not seriously question the Supreme Court's role in United States society. 

So, it is surprising to me that some groups have targeted attack ads against the United States Supreme Court. Fox and MSNBC will broadcast ads that attack the U.S. Supreme Court as the least transparent branch of government. Well, yea. That is why it is called the Supreme Court. Folks do not routinely get to listen to private deliberations by judges. It does not work that way.Judges think, research, discuss and then announce their decisions. There is no camera watching them deliberate. 

But, the group known as Fix the Court wants changes. It asks that oral arguments be broadcast live, make public announcements of decisions, that judges post their financial disclosures online, adhere to the code of judicial ethics for federal judges, disclose public appearances and allow press coverage, and to report reasons for recusals. See ABA Bar Journal report

It is true that Supreme Court justices do not report the reasons for their recusal. Sometimes, there is some mystery about why a particular justice recused himself/herself from a case. So far, that mystery has not affected a case in any way. And, in fact, most judges across the country do not explain why they recuse themselves either. 

Broadcasting oral arguments and making announcements about a decision that has been released. Really? That has been discussed over and over. Many judges, not just the nine justices, refuse to allow cameras or microphones inside a court room. Judges are loath to give up any control over their courtroom. I cannot blame them. Civil discourse inside a courtroom is indeed a precious commodity. Emotions run high. Perceived slights are everywhere. Judges are right to guard closely their tenuous control of the courtroom. 

Fix the Court has some agenda. That agenda does not include the efficient, fair process of justice. My guess is someone wants to "adjust" or fine-tune the relative independence of the judiciary. We may, and often will, disagree with particular decisions, but we should never reduce the independence of the federal judges. 

The Ugly Side of Practicing Law

There is a seamy side to lawsuits. I am sure this seamy side has been around ever since the Medieval days when representatives were hired because they were better criers. In the San Antonio Express News is a report about immigration lawyers who hire case runners, folks who go out and find clients. They lurk at immigration detention centers and refer clients to particular immigration lawyers. The lawyers pay folks to refer them cases. As explained in the Express News report, it is probably ethical to pay someone a salary, who then refers cases. It is probably okay to pay someone $50 per interview, but not okay to pay someone $50 to bring in a client. See San Antonio Express News report (account needed). 

In this context, ethics refers to the bar association's code of ethics. The bar association's system of ethics is well defined and generally, well understood. 

Ethical or not, it looks bad to most laypersons to pay someone to bring in clients, at all. Most of us look at lawyers as representing the keys to justice. So, case running is problematic as it is. It is much worse when a paralegal who has succeeded at bringing in clients starts her own paralegal business with her husband. Alejandra Driskell testified in deposition that she ran cases for three immigration law firms. Then, she went out on her own with her husband, George, to obtain a greater share of the profits. That is the ugly side of law. Practicing law has always been a business, but we like to think of it as something greater. 

George and Alejandra opened an office at One Riverwalk Place, a tony place in downtown San Antonio. Things must have gone well for a time, but in October, the Driskells filed for bankruptcy. 

Ms. Driskell has been sued by the Attorney General for practicing law without a license. The Driskells hired a lawyer, Amy Monkman. Ms. Monkman refused to respond to the Express-News' requests to talk. Ms. Monkman worked for $45,000 for the paralegal. For that $45,000, she put her career and reputation at risk. One can only hope it was worth it. 

Defamation in the Texas Workplace

 

 

 

 

 

Defamation refers to uspeaking an untruthful statement about someone. "Libel" refers to written defamation. "Slander" refers to oral defamation. In the employment context, defamation has an extra hurdle. In Texas, to charge an employer with defamation, the defamation must be made in the course and scope of his/her employment. That is, the defamatory statement must be related to the speaker's job. But, so long as the speaker makes the statement to persons with a duty or need to know, then the speaker will be protected by a qualified privilege. So, to qualify as workplace related defamation, the statement must be made as part of one's job. But, if the statement is part of someone's job, then it will be protected by a "qualified privilege."

For example, if a manager makes a statement to someone in Human Resources about an employee, even if that statement is not truthful, then the qualified privilege would probably apply. The manager's statement would be protected by this qualified privilege. 

An employee can overcome the qualified privilege only be showing that the speaker acted with actual malice. Showing malice is a high burden. Malice refers to a person knowingly and deliberately causing harm. Malice is more than a mistake or a misunderstanding. To show malice, an employee would have to show the speaker knew or should have known the statement was not true and that the speaker sought to cause harm of some sort. Many employees have come to me seeking redress for defamation. Rarely have I seen sufficient evidence to make a case of malice.  It is quite difficult to get inside a person's head and show what the manager was thinking. 

For example, an employer fires a person for alleged stealing. The employee did not steal.  But, how do we show malice? That is, how do we show the employer knew or should have known the theft allegations were not true? Most times, we cannot.  

Many of the normal principles of defamation law apply to the workplace: the statement must be clear and unambiguous. It cannot be capable of two different meanings, one of which might be non-defamatory. Truth is always an absolute defense to defamation. But, for most people charged wrongly with theft, there is little anyone can do about that sort of termination. Defamation lawsuits in the workplace are just too difficult. 

What is the Dollar Value of Employment Cases?

 

 

 

 

 

 

 

 

Clients and potential clients often ask me at some point what is the value of his/her case? What little they know of its value is colored by the ubiquitous Personal Injury lawyer ads. Or, sometimes, their knowledge is influenced by what some brother-in-law knows, or thinks he knows. So, some clients, a small percentage, expect wealth and riches.  

Employment cases are not car wreck cases. The employment discrimination statutes provide for specific types of damages. Title VII and the Texas law equivalent, Texas Commission on Human Rights Act, provide for lost pay and benefits, compensatory damages, punitive damages and costs of prosecuting the lawsuit which includes attorney's fees. There is nothing more. There is not, for example, such a thing as an award for the value of the home you lost or the divorce the job loss caused. Those sorts of losses do help show emotional suffering. But, no, there will be no dollar for dollar award regarding a lost home. I wish there were. The judge cannot award anything not allowed by statute. 

Lost pay and benefits include more than may meet the eye. It includes lost pay of course. It includes all lost benefits. So, save that COBRA letter that records the dollar amount paid by the employer for your medical insurance. I do not need to know how much you paid each month out of your paycheck for medical insurance. I do need to know how much the employer paid.  

Lost benefits include retirement benefits. Terminations involve different calculations than failure to promote. Lost promotions or raises can affect how much a 401K would grow. I have had a few clients who could "guesstimate" pretty well how much their retirement would have grown if they had received a particular step increase. If the client cannot make their estimate, then we may need to hire an economist to study the issue.  

Lost bonuses count. Of course, the employer will claim bonuses are never guaranteed. They may even point to policies which provide bonuses are never certain and depend on financial success each fiscal year. But, if the actual practice suggests that bonuses are likely and that failure to pay a bonus may have been motivated by discriminatory animus, then we have a fact issue regarding bonuses. If we have a factual issue, then the issue should be be decided by a judge or jury.  

Arriving at an amount for compensatory damages is complicated. Compensatory damages describes damages intended to compensate a person for emotional suffering. How do we measure emotional suffering? The best source is actual jury verdicts. If we can point to a similar case, involving similar discriminatory practices by similar employers and employees, then we rely on such cases. But, discrimination is rarely the same across industries. Employers often differ in very critical ways. So, truly comparable jury verdicts are rare. 

We also look at studies. There have been a few. Most studies show that a winning plaintiff in an employment cases gets no compensatory damages. The few who are awarded some amount are typically awarded an amount equal to or comparable to the amount of lost pay and benefits.  That is, if the discrimination victim is a Vice-President who lost $100,000 in pay and benefits, then the jury in such an instance would typically award $100,000 in compensatory damages - again, assuming the jury awards compensatory damages at all. If the victim is a warehouse laborer and his lost pay and benefits is $15,000, then the typical jury, who awards compensatory damages at all, would award another $15,000 as compensatory damages.  

That may not be fair. The emotional suffering of the VP and the warehouseman may very well be the at same high level. They may both lose their homes, marriages and suffer enormously. But, as I tell my clients, in the legal business, we do not deal in "fair." We have to deal in reality.

Punitive damages are very rare, according to studies. They tend to range across wide extremes. 

Of course, all these amounts are subject to caps. Title VII and the the TCHR Act are capped at various levels based on number of employees. The highest cap is $300,000. So, even the largest employer in the country will never see a larger award than $300,000 in compensatory damages.  

Once in a blue moon, you will see a jury award a million dollars for compensatory damages. But, that amount will be reduced by a judge to the appropriate cap level.  

So, as I hear from some clients, some brother-in-law may know of an "exact same case" that resulted in a million dollars. Great, I advise the client, go hire that brother-in-law, because he knows more than I do.  

Employer Can Require a More Healthy Workforce?

The health of workers will affect the amount an employer must pay for health insurance. The more ill a workforce is, the more the employer (and the employees) must pay for insurance premiums. That cost saving could lead to employers hiring only healthy workers. Or, it could cause employers to ask employees to take routine medical exams. One such employer, Honeywell, has indeed started asking employees to take medical exams. What happens if an employee refuses? That is the subject of a lawsuit filed by the Equal Employment Opportunity Commission. The U.S. District Court has ruled that Honeywell can keep requiring those tests. 

Honeywell's tests include blood pressure, cholesterol, and glucose and indications regarding whether the employee has been smoking. The EEOC filed this lawsuit in Minneapolis last month. Employees who refuses to take the tests could be fined up to $4,000 in surcharges and additional health care premiums. Honeywell says it wants to protect those employees who maintain a healthy lifestyle. The employer says the healthier employees should not subsidize the less healthy lifestyles of other workers. See CBS News report. And, of course, Honeywell appreciates, I am sure, that lower costs affect its bottom line. 

The EEOC filed suit based on the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. It seems to me the EEOC should also have included the Age Discrimination in Employment Act. I would expect many of those downtrodden, unhealthy workers are over the age of 50. 

A quick look at the lawsuit on Pacer shows that this ruling concerned a temporary restraining order. So, this issue is far from decided. 

Judge Reverses Sanctions Request in Discrimination Case

 

 

 

 

Yes, in federal court, either party can be sanctioned for its conduct during a lawsuit. Sanctionable conduct must be pretty egregious. National law firm, Littler Mendelson requested sanctions against a plaintiff who lost a summary judgment motion. Elaine Barley had sued Fox Chase Cancer Center in Philadelphia. Ms. Barley alleged that Fox did not accommodate her disability of asthma. In moving for summary judgment, the employer argued that Ms. Barley could not claim she could work with accommodation, since she had applied for Social Security disability saying she could not work. The U.S. district court granted summary judgment on that basis.

But, after winning the summary judgment motion, Littler Mendelson then moved for sanctions. The defense firm cited Federal Rule 11 and said Ms. Barley should have known much sooner that her case would not succeed. Its a frivolous motion under most standards. But to make matters worse, the defense firm redacted or blacked out almost every line of his affidavit. As part of his Rule 11 motion, the defense lawyer must list in detail the work performed for the client. The more detail, the better for the request. Fox requested some $126,000 in attorney's fees. Yet, the defense firm reeducated almost every line. Asking for $126,000, there were many, many lines to redact.  

So, Judge Dalzell responded with his own sanctions. He sanctioned the law firm for filing vexatious motions with the intention to harass the plaintiff. Filing such a motion makes little sense. The employer has already won. To then file a motion which is mostly redacted suggests pure harassment. The plaintiff could not respond to the request for attorney's fees, because it could not identify what the defense lawyers had done. The judge said the motion was so deficient that it was filed for the purpose of harassing the already defeated plaintiff. The defense lawyer mentioned in a footnote that he could provide more detailed information later. But, said the Judge, it is too late. That ship has sailed. The defense lawyers guarded their services as if they were "top-secret information involving national security," said the court.

The Judge awarded sanctions under Section 1927. Richard Harris, the lead lawyer, said they would appeal. See ABA Bar Journal report

My guess is the defense lawyer wanted to punish the plaintiff and just did not have time to prepare a proper affidavit with good detail. Or, he may have inflated the bill to his client so much that he did not have time to clean it up. In any event, he should not have filed such a deficient motion. 

Avvo Offers 15 Minutes of Legal Advice

 

 

 

 

 

 

 

 

You have to love free enterprise. Only a true entrepreneur would come with a system of turning legal advice into a drive through window. Avvo, the legal referral website, now offers 15 minutes of legal advice for a mere $39. The service applies to a variety of areas of law: immigration, criminal, divorce, family, employment, landlord-tenenat, real estate and small business. Avvo seems to have selected every area a consumer might need. I have to say, after 15 minutes, I am still waiting to hear the essentials of an employment case. The service is available in 15 states, including Texas. See ABA Bar Journal report

I am sure 15 minutes would work for some occasions, but if someone really has a case, 15 minutes is the beginning of the discussion, not the end. Maybe, we should just set up shop with a drive-in window and offer a free apple pie with that order....

A True Cowboy Judges a Person On His/Her Own Merits

An acquaintance passed away recently. His passing brought to mind the high school I graduated from in 1975. Mike Gallagher graduated from John Marshal High School a couple of years before I did. He was a football player, and an officer in the Fellowship of Christian Athletes. In other words, he was at the top or near the top of our high school social order.  He would have started attending Marshall about the same time as the University of Texas won the national championship in 1969 with the last all-white team. 

In talking about his passing, a few alumni offered stories about Mike. One story caught my attention.  Another student was Mormon. We did have a few Mormon students at our school, not that I ever noticed at the time. The Mormon student, we can call him Ray told this story about Mike: not many people harassed Ray about being Mormon. But, in this one class, there was one boy who harassed Ray everyday. One day, when the teacher was out of the room, the boy got particularly loud and obnoxious. Ray did not know what to say. But, Mike did. He got up in front of the room and told the boy to shut-up. He was tired of hearing him. Mike was a big guy, physically and otherwise. The boy shut up.

We had Hispanic students and a few black students. But, the culture at John Marshall High School in the 1970's was definitely cowboy. It had always been a cowboy school. And, even in the 70's. with dozens of new suburbs in the district, the cowboys still ruled the roost. I did not notice it at the time, but there must have some major social change in San Antonio's rural northside in the 1970's with all these suburban kids and minorities, including Mormons, showing up. In my class of 1975, we had a black cheerleader. Looking back, she must have been the first ever at our school. But, no one ever suggested there was anything unusual about having a black cheerleader. Everyone loved Rita Crockett. What was there to question?

One would think there might have been some prejudice against the growing Mexican-Amrican population and the incoming black students. But, there was very little. I recently asked a fellow alumnus, who is Mexican-American, and he could not recall any overt bias against Hispanics. The best reason we could arrive at was the cowboy culture. 

A true cowboy takes everyone on their own merits, for good or ill. An old saying in the West goes something like this, "I do not care if he has polka dot hair and green skin, if he's there when I need him, he's ok." Like most high schools, football was king at our school. And, that was certainly true in football: If you are there when I need you, then you are ok. And, sure, a great many of the cowboys played football. I think the working world would be much better off with a few true cowboys. 

Blackwater Guards Found Guilty

We went into the Iraq War on the cheap. We entered that war with the smallest number of troops possible. So, that lead to the US relying on private security firms for a number of missions. One such mission was providing security for the diplomats. Four Blackwater security personnel were found guilty last week after they killed 17 Iraqi civilians. One was found guilty of murder. The others were found guilty of manslaughter. See CBS news report. The guards opened fire on a crowded Baghdad street intersection after they claim to have heard shots fired. 

I was not impressed with Blackwater when I was in Iraq. They moved into our building on FOB Speicher. Ignoring the appropriate chain-of-command, they began to erect exterior stairs without first seeking permission from any authority. They were forced to stop work on the stairs mid-way through the project. Later, when someone from my staff section was checking something on the roof, they found that Blackwater had tapped into our internet feed - again without seeking permission or consent. 

Even for uniformed soldiers, with good training ad supervision, it is hard to never shoot an unarmed civilian in that sort of war. Young soldiers, or unclear situations can lead to accidents. For mercenaries, the challenge is much different. 

Service in a war zone is not too different than a trip to Las Vegas. It is tempting to slip into the "what happens in Vegas stays in Vegas" syndrome. Not only are you far from home, but you feel a lot of power when you hold that .50 caliber machine gun in your hands. The mercenary soldiers feel the same things, apparently, and feel little of the discipline required of uniformed soldiers. We can contract out guns and vehicles. But, contracting out good order and discipline is much more difficult.