“Silicon Valley”: Start me up

September 17, 2015 - by: Matt Gilley 0 COMMENTS
Matt Gilley

Mike Judge has done it again. A few months ago, I wrote about one of my favorite workplace flicks, Office Space, and the dangers of pushing off uncomfortable employment issues (specifically Milt Waddams, a mumbly arsonist-to-be). Now I’m hooked on Mike Judge’s latest project, HBO’s Silicon ValleySilicon Valley

Silicon Valley chronicles the ups and downs of life in a tech startup.  The feature characters are all residents of an eccentric business incubator that allows them free room and board in exchange for 10 percent of their companies and some questionable business direction. One of the characters (Richard) suddenly scores the attention of several venture capitalists and potential acquirers for his company, Pied Piper, and its revolutionary compression algorithm. From that point, the show does a brilliant job of showing that initially successful tech startups are a bit like the dog who chased the carand caught it.

After multiple suitors woo Richard with various offers, he chooses to turn down a $10 million cash offer for Pied Piper. Instead, he signs up with a quirky genius of a venture capitalist who seeds him with $200,000 in exchange for 5 percent of the company. He hires on the rest of the guys (all of them are male, reflecting a well-worn concern about the tech sector) in the incubator to grow the company and go to market. He soon realizes, however, that he’s in over his head and his efforts to play catch-up give each episode plenty of creative tension to move the series along.

For instance, Richard’s first meeting with his VC is a disasterhe has no business plan or the slightest clue how to get Pied Piper to market. In fact, there’s a big doubt whether it will go to market as Pied Piper (a California irrigation company already has the name, and Richard learns how to negotiate on the fly to convince a leathery farmer to sell him the name). Later, word spreads about his discovery, and established tech giants and thieving competitor startups try to trick him out of his IP. Ultimately, the second season concludes with Richard prevailing in a high-stakes arbitration against a tech giant that claimed ownership of his IP; even better for me, the arbitrator gave Richard the victory because the tech giant overreached and included an unlawful restrictive covenant in his prior employment contract with the company.

If you work for an early-stage enterprise or are looking for a fun way to see the pitfalls common to startups, Silicon Valley is a great way to spend some time. Each episode is going to cover something from my practicetrade secrets, arbitration, and litigation, working some diversity into a close-knit company, and transitioning from a freewheeling group of man-children in a den to a disciplined operation.  Season 3 starts in FebruaryI, for one, can’t wait to see what’s next.

Categories: Arbitration / Matt Gilley

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Ranking the high court

December 01, 2014 - by: Matt Gilley 0 COMMENTS
Matt Gilley

When football season kicked off earlier this year, I took the chance to glean some insights for HR professionals from the difficult job facing the new college football playoff selection committee. Now that we’re coming up on the end of the football season, I’m turning to the committee once more for inspiration.shutterstock_105026918

As I write, the selection committee is chewing over this weekend’s results and will let us know its judgment on the four best teams (so far) in college football. Soon, they will choose the “final four” who will play a two-week tournament to decide the national champion. Right now, Alabama and Oregon are pretty much the consensus #1 and #2. Despite Florida State’s best efforts to play their way out of this thing, they keep finding ways to win and are generally #3 by default. Mississippi State (last week’s #4) took it on the chin from their archrival, Ole Miss, so the committee will apply its eye test and pick a new #4 (and leave an angry #5 and #6). My money is on TCU at #4.

I’m going to borrow the format and select my top four Supreme Court employment law decisions from the last five years. I’ve ranked them below, along with a capsule summary that explains why I’ve ranked it #1, and so on. Then, I’ll pair them up, play them off of each other, and pick the champion. Feel free to disagree in the comments!

The Final Four

Number 1: Wal-Mart Stores, Inc. v. Dukes (2011). This case is a true heavyweight, combining employment law and federal class action procedure. Wal-Mart won at the Supreme Court, which held that a nationwide class action of present and former female employees was inappropriate under the Federal Rules. Wal-Mart’s win in this case was a powerful blow against attempts to aggregate individual employment decisions under one lawsuit.

Number 2: New Process Steel, L.P. v. NLRB (2010). This one gets in on flash. The case garnered a ton of controversy, newsprint, and political attention at the time. The ultimate question, however, may have been a bit pedestrian: Eventually, New Process Steel prevailed when the Supreme Court held that two members of the National Labor Relations Board did not constitute a quorum of the board for exercising authority.

Number 3: Stolt-Nielsen S.A. v. AnimalFeeds International Corp. (2010). Wait a minute – this one isn’t even an employment case! No matter. AnimalFeeds is a key component of a recent line of Supreme Court authority that supports the use of arbitration to resolve disputes. More and more employers are presenting arbitration programs to employees, and they will particularly like the holding in this case that class action arbitration is not available unless the parties specifically authorize it.

Number 4: Gross v. FBL (2009). This case sneaks in and will probably seem a bit esoteric to non-lawyers. Gross held that “but for” jury instructions are the rule for Age Discrimination in Employment Act claims, unlike status discrimination Title VII claims in which a lower “mixed motive” instruction is appropriate. Gross has already had one follow-up: University of Texas Southwestern Medical Center v. Nasser (2011), which applied the higher “but for” standard to Title VII retaliation claims.

The Predictions

In the Rose Bowl, top-ranked Wal-Mart v. Dukes will win a surprisingly close victory over Gross v. FBL. Gross is already punching above its weight, but just can’t overcome the sheer significance of the Wal-Mart opinion. Next, in the Sugar Bowl, AnimalFeeds and its arbitration impact will score a minor upset over New Process Steel. Finally, Wal-Mart claims the title of most significant Supreme Court decision in a championship game that is never all that close.

So … who thinks my crystal ball is broken?

Say it ain’t so, A-Rod?

January 20, 2014 - by: David Kim 0 COMMENTS
David Kim

Back in August 2013, I wrote about the Biogenesis scandal that resulted in the suspension of 13 major and minor league baseball players, including a 211-game suspension for Alex Rodriguez. Well, thanks to A-Rod, this story has become the gift that keeps on giving.gummy bears

On January 11, 2014, Arbitrator Frederic R. Horowitz issued his decision with respect to A-Rod’s grievance challenging his suspension. While the Arbitrator reduced A-Rod’s suspension to 162 games, plus the postseason (the entirety of the 2014 season), the decision largely cuts against A-Rod and is viewed as a big win for MLB. While the decision itself would have remained confidential under the terms of the collective bargaining agreement between MLB and the MLB Players Association, it is now a matter of public record as a result of A-Rod’s latest Hail Mary, a federal lawsuit seeking to throw out the arbitrator’s award.

The arbitrator’s 34-page decision goes into fairly specific detail regarding A-Rod’s regimen of performance-enhancing substances, hundreds of text messages between A-Rod and Anthony Bosch (including fun code names such as “Gummies,” “Pink Food,” “Liquid Soup,” and a host of others) and some powerful language regarding why a suspension for the entire 2014 season and postseason was deemed warranted based on the supporting evidence. Specifically, the arbitrator’s decision states that “It is recognized this represents the longest disciplinary suspension imposed on a MLB player to date. Yet Rodriguez committed the most egregious violations of the JDA reported to date, and engaged in at least two documented attempts to cover up that behavior in violation of the Basic Agreement.” In addition, “[w]hile this length of suspension may be unprecedented for a MLB player, so is the misconduct he committed.” Powerful stuff.

ESPN’s legal analyst Lester Munson is on record as claiming A-Rod has “zero chance of ultimate success” in seeking to overturn the arbitrator’s decision with his latest lawsuit. While “zero” may seem like hyperbole, A-Rod faces an extremely uphill battle. Courts are reluctant to overturn an arbitrator’s decision, as the rationale for arbitration is to serve as an alternative to the expense and delay inherent in litigation. Consequently, the burden for vacating an arbitration award is extremely high, requiring A-Rod to demonstrate the arbitrator exhibited “manifest disregard for the law” or was not impartial and therefore was biased against A-Rod.

So what is A-Rod thinking with this lawsuit? He’s probably thinking he’s got nothing to lose. He can afford the team of attorneys and has the time to dedicate to this lawsuit. In addition and in a somewhat surprising move, A-Rod also has sued the MLB Players’ Association, claiming it breached its duty of fair representation to him throughout the entire process that led to his suspension, as well as the arbitration. Perhaps by going after the Players’ Association as well, he is hoping he can get discovery of information that could show the arbitration process was flawed in some way.

Either way, it will be extremely difficult for A-Rod to prevail, and while he may have continued the fight, no amount of money or resources will enable him to emerge victorious unless a smoking gun somehow magically appears. This situation highlights the importance for employers to ensure the proper drafting and negotiation of arbitration agreements with their employees, or with the employees’ representative union. Because if you succeed in the less costly and more efficient forum of arbitration, it’s doubtful that at the other side of the table sits a millionaire with motivation to spend whatever it takes to pursue the unlikely dismissal of such an award.

Biogenesis and the (Bad) Boys of Summer

August 16, 2013 - by: David Kim 0 COMMENTS
David Kim

For some people, summer evokes thoughts of sunshine and long walks on the beach with sand under their bare feet (sounds like the setting of a Nicholas Sparks novel … or so I’m told). For me, I think of baseball. As an annual subscriber to MLB Extra Innings, I think of the plethora of games waiting for me when I get home from work, especially those of my hometown Red Sox. I constantly check my fantasy baseball team to see what moves I can make to catapult me up the standings. When I’m working late, the text from my wife doesn’t just ask when I’m coming home, but also provides me with spirit-lifting updates: “McCutchen just hit a three-run bomb.” Pause. Fist pump. Back to work.

But this summer, my fellow baseball fans and I aren’t the only ones thinking and talking about America’s pastime. Biogenesis has dominated the headlines, culminating in the suspension of 13 major and minor league baseball players this month, in addition to last month’s suspension of Ryan Braun. Interestingly, none of these players actually tested positive for performance enhancing drugs (except for Braun back in 2011, who successfully appealed based on a technicality, and has now been introduced to my friend karma). A failed test would establish per se grounds for a 50-game suspension pursuant to the Joint Drug Agreement (JDA) between Major League Baseball and the Player’s Union.

The JDA, however, also provides that the commissioner of baseball may discipline a player for “just cause,” in essence providing that strong enough circumstantial evidence can be sufficient to justify suspension. While the majority of baseball players were suspended 50 games pursuant to the “just cause” provision under the JDA, Braun (65 games) and Alex Rodriguez (211 games) were given additional suspensions. Under the Basic Agreement between the union and MLB, players may be disciplined for “conduct that is materially detrimental or materially prejudicial to the best interests of Baseball including, but not limited to, engaging in conduct in violation of federal, state or local law.”  (link to the JDA and Basic Agreement here if you’ve got some down time).

MLB is clearly taking all measures in its power to “clean up the game.” But while the organization is the most visible employer interested in ensuring a drug-free environment in its workplace, it is not the only one. Employers of all kinds have either implemented, or are considering implementing, workplace drug-testing policies, protocols, and procedures. However, as drug-testing laws in each state differ dramatically, employers must ensure that they are in compliance with applicable law. Each state has its own laws about who can be tested and under what circumstances. For example, some states permit random, or suspicionless, testing. Other states permit testing only if there is a reasonable suspicion of drug use, and still others permit testing only in specific safety-related situations. State laws also differ with respect to how the testing may be conducted, the procedures required for any testing entity, and what specific type of prior notice, if any, is required to be given to an employee or applicant.

In addition, employers with unionized workforces should be prepared to negotiate all aspects of its drug-testing policy, which the National Labor Relations Board has determined is a mandatory subject of bargaining. Just don’t expect to be dealing with a union highly motivated to clean up its workplace like the MLB Player’s Union or employees who will quietly accept discipline based on circumstantial evidence. Well, except for A-Rod, who we all know is the only player appealing his suspension. Of course, A-Rod has well over 25 million reasons to appeal (base salary of $25M in 2014, not including incentives and bonuses).  And I have no reason to believe A-Rod’s appeal, or the issue of performance enhancing drugs in baseball, will be resolved anytime soon. Play ball.