Displaying 4 category results for July 2011.x

Oregon wrongful discharge remedy available for Sarbanes-Oxley violation

By Stacey Mark
July 25, 2011

The Oregon Court of Appeals last week revived a plaintiff's common law wrongful discharge claim against his former employer, based on his claim of retaliation for making complaints to his supervisors about management conduct and threatening to take his complaints to the corporate directors, and also for exercising his right to complain that his bonus was cut.  The trial court had dismissed the complaint for failure to state a claim.

In De Bay v. Wild Oats Market, Inc., the plaintiff alleged that he gave his supervisors a detailed written report questioning the management team's actions and motives in deviating from the company's strategic growth plan.  Plaintiff also alleged that his bonus was cut in half after he made the report, and that he was subsequently fired for threatening to bring his concerns to the board.  Plaintiff argued on appeal that these allegations were sufficient to state a wrongful discharge claim for exercising important societal rights and obligations protected under state and federal laws, specifically ORS 659A.230, ORS 652.355, and section 806 of the Sabanes-Oxley Act, 18 USC § 1514A. 

The Court of Appeals found that a wrongful discharge claim based on "whistleblowing" under ORS 659A.230 requires that the employee complain to a recognized outside authority with the power to take action on such complaints.  Plaintiff had not alleged a report to any outside authority and therefore failed to state a claim under that statute. 

Likewise, the court found that ORS 652.355, which prohibits retaliation for making a wage claim, did not apply to plaintiff's circumstances because he did not allege that he had filed or even discussed a "wage claim." 

However, for the purpose of a motion to dismiss, plaintiff's allegation that he was fired for reporting managerial wrongdoing to his supervisors fell within the scope of conduct protected by Sarbanes-Oxley, which prohibits a publicly-traded company from discharging an employee for reporting to a supervisor a violation securities laws or any federal law relating to fraud against shareholders.  In addition, the court found that Sabanes-Oxley did not provide the exclusive remedy for the alleged conduct because, unlike a wrongful discharge claim, the statute did not allow for the recovery of noneconomic or punitive damages.  On that basis, plaintiff was entitled to pursue a claim for common law wrongful discharge.

The opinion provides another reminder to employers that firing employees for internal reports of wrongdoing may provide the basis for "whistleblower" claims under both statutory and common law.

Grocers' agreement to resist strike remains subject to antitrust scrutiny

By Lori Irish Bauman
July 20, 2011

Last week the Ninth Circuit, following a rehearing en banc, declined to exempt from antitrust scrutiny an agreement among grocers in Southern California that was designed to minimize the economic impact of a strike.  In State of California v. Safeway, California sued a group of grocery stores for entering into a profit-pooling and market-allocation agreement as an economic weapon to advance the grocers' position in a dispute with their unionized employees.

While the U.S. Supreme Court has recognized an exemption from the antitrust laws for certain agreements among competitors relating to labor negotiations, the Ninth Circuit en banc panel was unwilling to apply that blanket exemption to the grocers' agreement.  Yet although the agreement is subject to the antitrust laws, the panel declined to find antitrust liability on the record before it.  According to Judge Gould writing for majority, the limited duration of the agreement and the presence of many other competitors in the market make the agreement inappropriate for per se or "quick look" treatment by the court.  Instead, the district court must conduct a rule of reason analysis to determine whether the anticompetitive effects of the grocers' agreement outweigh its procompetitive effects.

See our earlier coverage of the case here and here.

Oregon Court of Appeals: Tortious interference claim accrues when injury occurs, not when wrongful act occurs

By Lori Irish Bauman
July 16, 2011

A dispute over the inheritance of a family farm set the stage for a ruling by the Oregon Court of Appeals this week on the law of interference with economic relations.  In Butcher v. McClain, plaintiffs were a woman and her children, and defendants were the siblings of the woman's deceased husband.  Plaintiffs contended that defendants had wrongly caused the family matriarch to execute a will that disinherited plaintiffs from the family farm.  Plaintiffs sued for tortious interference with a prospective inheritance. 

Defendants moved to dismiss the claim on the ground that the two-year statute of limitations had run.  The trial court agreed, holding that the claim accrued when the matriarch executed the will disinheriting plaintiffs, more than two years before suit was filed.

The Court of Appeals reversed.  Judge Rosenblum, writing for the Court, first noted that Oregon does recognize the tort of interference with an economic advantage in the form of a prospective inheritance.  Such a claim is subject to the two-year statute of limitations for torts.  According to the Court, the claim accrues not when the wrongful act occurs, but when the interference in fact causes injury.  Thus, plaintiffs' claim accrued not when the will was executed, but when the matriarch died and plaintiffs lost their expected inheritance.  Because those events occured within two years of the date plaintiffs filed suit, the claim was timely.

U.S. Supreme Court issues its first major ruling on personal jurisdiction in 20 years

By Heidee Stoller
July 1, 2011

On Monday, a divided U. S. Supreme Court wrestled with the scope of personal jurisdiction in a products liability case.  A concurring opinion signaled that the Court may in the future be open to re-assessing standards for personal jurisdiction in light of, for example, the use of the Internet in commerce. 

J. McIntyre Machinery Ltd. V. Nicastro involved a plaintiff, Nicastro, who was injured  while using a metal-shearing machine manufactured by the defendant, J. McIntyre Machinery, in England.  Nicastro sued J. McIntyre in New Jersey state court.  The New Jersey Supreme Court held that jurisdiction over defendant was appropriate under the “stream-of-commerce” doctrine, because the manufacturer knew or reasonably should have known “that its products are distributed through a nationwide distribution system that might lead to those products being sold in any of the fifty states.”

Justice Kennedy, writing for a plurality of four, reversed the New Jersey Supreme Court, holding that the “stream-of-commerce” doctrine was insufficient to establish jurisdiction.  Justice Kennedy revisited the competing opinions set out in Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987), noting that “[t]he rules and standards for determining when a State does or does not have jurisdiction over an absent party have been unclear because of decades-old questions left open in Asahi Metal.”  Justice Kennedy criticized Justice Brennan’s Asahi Metal concurrence, stating that “a [jurisdictional] rule based on general notions of fairness and foreseeability is inconsistent with the premises of lawful judicial power.”  Instead, “it is the defendant’s actions, not his expectations, that empower a State’s courts to subject him to judgment.”

Justice Kennedy noted that the claim of jurisdiction over J. McIntyre centered on three facts: (1) an independent company agreed to sell machines manufactured by J. McIntyre to buyers in the U.S., (2) J. McIntyre’s employees attended annual conventions in the U.S., but not in New Jersey, to advertise the machines, and (3) no more than four machines ended up in New Jersey.  Justice Kennedy held that these facts were insufficient to establish jurisdiction, because while “[t]hese facts may reveal an intent to serve the U.S. market, . . . they do not show that J. McIntyre purposefully availed itself of the New Jersey market.”

Justice Breyer, joined by Justice Alito, concurred in the judgment.  Justice Breyer found that it was unnecessary to critique the tests of foreseeability and fairness, as Justice Kennedy did, because the case came within existing precedent.  He stated that the Court had never held that “a single isolated sale, even if accompanied by the kind of sales effort indicated here, is sufficient” to establish jurisdiction. Justice Breyer then criticized the “strict rules” set out in the plurality opinion, which “limit[ed] jurisdiction where a defendant does not intend to submit to the power of a sovereign and cannot be said to have targeted the forum.”  Justice Breyer also signaled that he was open to revisiting the issue of personal jurisdiction in the future, noting that “there have been many recent changes in commerce and communication, many of which are not anticipated by our precedents.”  He noted, however, that “this case does not present any of those issues,” and that it was “unwise to announce a rule of broad applicability without full consideration of the modern day consequences.”

As in Asahi Metal, no opinion won the support of a majority of the Justices.  Therefore, the Court’s holding is the narrowest holding that did have the assent of a majority of the Justices, which is likely Justice Breyer’s concurrence.  Justice Ginsberg dissented, joined by Justices Sotomayor and Kagan.