Leaks and whistleblowers and liability, oh my!

August 07, 2017 - by: David Kim 0 COMMENTS
David Kim

Leaks are everywhere. They happen in politics, in sports, in the entertainment industry, in people’s everyday lives, and (unfortunately for many of us, myself included) in the roofs and pipes in our homes.

  • How do we know that Kyrie Irving wants a trade from the Cleveland Cavaliers? Someone leaked it to a reporter.
  • We know the official reason the new Han Solo Star Wars movie changed directors after months of shooting was because of “creative differences.” But how do we know what those specific differences were and how much animosity actually existed between the producers and the now-dispatched directors? Because someone leaked the e-mail exchanges.
  • Did you know that the most recent Game of Thrones was available for viewing before this past Sunday’s official airing? Heard someone leaked it online.
  • Did you hear that Bob really likes Kate, that their first date is next week and Bob is taking Kate to the place that Kate told Betty (who told Bob) she always wanted to try? John (who works with Bob, but also has mutual friends with Betty) leaked it to me.Trading secrets

It’s no different with politics, where leaks have always been a part of the culture. Except that they are often more newsworthy to the general public and provide a source of debate for the political pundits in the news media. I think it can be objectively said, however, that the existence of “leaks” in politics has taken on an increasingly more pronounced role in the past year. Everywhere you turn, someone is talking about leaks, whether it’s the necessity to stop leaks, how leaks harm our institution, whether we wouldn’t know the actual truth without the leaks, and so on. Everyone’s got an opinion.

Leakers vs. whistleblowers

What’s also interesting is how some political commentators conflate the term “leak” with “whistleblower” or use them as if they are synonymous. Clearly, not every leak of information, documents, or conversations constitutes actual whistleblowing activity. Sometimes the leak is done simply for political gain (to both create a favorable or unfavorable view of the institution or person who is the subject of the information) or to get allegedly newsworthy information (i.e., neither classified nor related to illegal actions) into the public realm.

When it comes to actual whistleblowers, we often think of the brave souls who shed light on invidious and illegal practices by political operatives or money-grubbing corporate executives and corporations that harm individuals or the public good. While this is certainly the more prevalent and traditional view of whistleblowing activity, it isn’t the only one.

In the employment context, there are a variety of laws that protect employees who engage in whistleblowing “activity.” In particular, many states have enacted whistleblower protection laws, which in application can be very broad. New Jersey’s Conscientious Employee Protection Act prohibits an employer from retaliating against an employee who complains about a practice he or she “reasonably believes” is a violation of a law, rule or regulation. This means the employer doesn’t even have to engage in conduct that is violative of any law, rule or regulation, only that an employee complained about something that he or she “reasonably believed” was a violation and that an adverse action occurred as a result of this complaint. That standards sets a very low bar for filing a lawsuit and surviving the pleadings phase, thus requiring employers to expend significant sums in defense costs, even if they do ultimately prevail. A number of other states have similar laws, each with varying levels of breadth and scope.

Bottom line for employers

Just because not every leak constitutes whistleblowing activity, that doesn’t mean that workplace complaints also don’t automatically constitute protected whistleblowing activity. While the complaint may not rise to what you would typically consider to be “blowing the whistle” on the company, be aware that broad state whistleblowing laws could in fact protect the complaining employee from adverse action. While you mull that over, please excuse me. I have to go find someone to fix my roof leak.

Mad Men ends: What have we learned?

May 19, 2015 - by: Josh Sudbury 1 COMMENTS
Josh Sudbury

The seven-season-long nonstop drink-and-smoke-a-thon that was Mad Men has come to a close. Were you entertained? Were you satisfied? Better yet, did you learn anything?800px-Mad_Men_(logo).svg I will spare you my personal thoughts on the merits of the ending as there are countless commentaries available on the Web. (Really, it’s amazing how many there are.) Suffice it to say that the “ending” appeared to bring more new beginnings than closure: Roger Sterling’s (third) marriage to Marie Calvet; Joan’s new production company; Pete Campbell’s new job at Lear Jet; Ken Cosgrove at Dow Chemical; Peggy and Stan finally admitting they loved each other (though no one makes falling in love more awkward than Peggy Olson); and, last but not least, Don/Dick Draper/Whitman with his back to the California coast dreaming of the most iconic Coca-Cola ad of the 20th Century.

From the perspective of an employment lawyer, one of the most notable developments that occurred in the last few episodes, however, was not one of the evolution (or devolution) of the individual characters, but the constant upheaval at the advertising behemoth, McCann Erickson. The second half of the final season begins with the revelation that McCann’s acquisition of Sterling Cooper was not a partnership but, rather, Jim Hobart’s mastermind plan to fold the old competitor into McCann’s ever-increasing portfolio–even at the expense of several expensive conflicts-of-interest. But, the Titanic of the ad world can’t hold on to it all. And, companies of all sizes and industries can take a few lessons.

The first example is the unrelenting sexual harassment of Joan Harris, which results in an out-of-court settlement. While Joan’s parting gift is likely a drop in the bucket to McCann financially, the nonmonetary cost is a bit more significant. The company not only lost Joan and her ever-burgeoning professional prowess, but also her Rolodex. Sure, McCann has lots of people with connections, but they could still have Joan’s, too, had they not been such pigs. Also, there is nothing said of any recourse to responsible harassers within McCann. Because the setting is 1970, it’s easy to conclude that Jim Hobart feels Dennis and Ferg are infinitely more valuable to McCann than Joan. In today’s world, however, this view is shortsighted to say the least. Having not been counseled, the harassers are likely to repeat their actions, setting the scene for potential legal action down the road. Moreover, the company’s failure to respond to complaints of alleged harassment damages its ability to establish the affirmative defense in later litigation. Companies should have dedicated lines of communications for employees to communicate complaints of this nature and must respond with internal investigations and, where necessary, disciplinary action.

Then, there was the swift exit of Pete Campbell to Lear Jet. While I never personally liked Pete’s character, a consistent staple of the plot line was his solid ability to manage clients. As a result, his contract with McCann was apparently airtight, and his buyout sizable. Still, this didn’t keep him from making the move when a better opportunity came calling. The lesson here is not so much legal as it is practical: Employees come and go–especially talented ones. Such is the natural order of things. So, the best thing an employer can do is to make sure it is protected if and when this turnover occurs. If you have employees like a Pete Campbell, who represent your direct contacts with your clients and customers or who have access to confidential, trade-secret information, you should take steps to protect those business interests.

Noncompete, nonsolicitation, and nondisclosure agreements are not always necessary but can be very helpful in some cases. More important, these documents don’t draft themselves and magically appear when you need them. Business owners must take the time to put thought into the specific business interests they are seeking to protect and should typically enlist the help of a professional to tailor these agreements to their needs and the laws of the states in which they may be applicable. Even if the agreements are in place, when  an employee or former employee challenges or breaches these agreements, the company must make a business judgment on how far it is willing to go to enforce such an agreement, as this type of litigation can have ancillary consequences to client relationships or market reputation.

Lastly is the real McCann’s handling of its role in the show. If you have read any commentaries about the show or are familiar with the world of advertising, you may be aware that McCann is actually a real company. While reports state McCann wasn’t consulted on the details of the show’s plot, the company has apparently played along by commenting on Twitter about the ups and downs of its made-up history on the show. (Though — it is apparently true that McCann was responsible for that iconic Coca-Cola ad seen at the end of the finale.) Credit should go to McCann for its good-spirited response to its role in show. While the company certainly could have responded negatively to being used as the villainous backdrop for the final season, it has instead chosen to play along, which has resulted in an uptick in its notoriety. Granted, not every circumstance can be handled with the stroke of a pen. In this situation, however, McCann’s savvy serves as a lesson to business owners about the ability of a well-crafted response to diffuse conflict in many instances.


With pals like this, who needs enemies?

May 12, 2014 - by: Andy Tanick 2 COMMENTS
Andy Tanick

For those entrepreneurs who have struck it rich thanks to the Internet, Al Gore’s invention has been a wonderful thing. But a news story last week illustrated that the Internet also can cause a lot of headaches–even for the same people whose children and grandchildren may never have to work a day in their lives because of the worldwide wealth created by the worldwide web.

This story comes to us courtesy of the Internet payment processing giant, Paypal. According to Paypal, the company’s former director of strategy, Rakesh “Rocky” Agrawal, responded to anshutterstock_166165568 offer to take on a new role at the company last week by “choosing to turn a career-defining moment into career-destroying infamy.” Specifically, “Rocky” responded to the offer by inexplicably posting a series of angry, profane, and bizarrely nonsensical tweets on Twitter. Those tweets that were actually comprehensible included suggestions that Paypal executives perform physically impossible feats that best not be described here. Those tweets that were less decipherable included messages such as, and we quote, “jjjjj 999 I’mk nokkkkkiikkknokkkkkiikkkkkkjjnmo88iok99okkoolooolo.” Rocky has since claimed that his tweets were meant to be private (oh, THAT explains it) and has apologized, but Paypal isn’t buying what he is selling–probably even if he offers to accept payment via Paypal.

The Paypal situation provides yet another example of the havoc that employees can wreak on their employers through social media. Gone forever are the days when employees limited their sexual harassment, defamation, and just plain old stupid behavior to old-fashioned media such as memos, letters, emails, and the spoken word (remember that one?). These days, men and women who are intent on behaving badly have so many more ways to do so. “Older” employees (i.e., those over 30) still use Facebook and Twitter, while the millennials have long since moved on to things like Snapchat, Instagram, and other social media that the author, being decidedly well beyond millennial status, doesn’t even know about.

What can an employer do to minimize its risks arising from employees’ social media use?  For starters, adopt a written social media policy that makes the following points:

  • Communications that would violate the company harassment policy are equally prohibited if posted on the Internet.
  • Confidentiality policies, including policies regarding client or patient confidentiality, apply with equal force to Internet posts.
  • Employees should state that any controversial (e.g., political) views expressed in their posts are personal and not those of the company.
  • Employees should not post statements, photos, or videos that reflect poorly on their employer, unless the post is legally protected (see below).

In addition, employers should revise their existing harassment, misconduct, and confidentiality policies, among others, to make sure they cover online conduct.

Of course, employers also need to avoid violating their employees’ rights with regard to social media. While there is no right to “free speech” in connection with private employment, the National Labor Relations Act (NLRA) provides both union and nonunion employees with certain protections that can apply to their use of social media. Specifically, the NLRA provides employees with a right to “engage in concerted activity for the purpose of collective bargaining or for other mutual aid and protection.”  To be protected, the activity must be undertaken by two or more employees, or by one employee with the authority of others, and it must relate to terms and conditions of employment. The NLRA also makes it illegal for an employer to interfere with employees in their right to engage in such protected activity, and forbids rules, policies, or actions that “reasonably tend to chill employees in the exercise” of these rights.

In addition to the NLRA, other laws can come into play when employers affirmatively seek out information about employees via social media. The Stored Communications Act (SCA) prohibits unauthorized access of disclosures of stored communications, like emails or social media postings. The Computer Fraud and Abuse Act (CFAA) prohibits obtaining information via intentional unauthorized access to “protected computers” involved in interstate commerce. The Fair Credit Reporting Act (FCRA) may come into play when employers seek out certain background information about employees. And there’s always a basic claim for invasion of privacy.

So, what’s the lesson here? Like Paypal recently learned, your employees’ use of social media, even on their own time, in their own homes, on their own computers, can still create headaches for you as their employer. A good social media policy can help reduce the risks, but tread lightly, because your employee’s post–no matter how irritating–could be legally protected.

Method to their madness, but what if Freddie the freelancer had stolen Don Draper’s idea?

April 18, 2014 - by: Brian Kurtz 0 COMMENTS
Brian Kurtz

I watched the opening scene of Mad Men (Season 7, Episode 1) and thought, “Wow, Freddie has really gotten his act together.” His Accutron pitch, so polished, so vivid, so moving. Don Draper himself could not have done better. Turns out Don couldn’t have done better, but only because it was revealed later that Don himself was feeding Freddie pitch ideas to use as a freelancer.

But what if the facts were slightly different? What if Don and Freddie were just two advertising guys eating sausage hoagies over lunch, casually sharing pitch ideas? And then what if Freddie took one of Don’s ideas and turned it into a successful pitch for which Freddie received credit and revenue? Could Don sue Freddie?

Don might consider a lawsuit for conversion under the theory that Freddie deprived him of the value of his property–his ideas–without consent. But Neshutterstock_80843131w York courts, like other jurisdictions, do not recognize conversion as a viable theory to recover intangible property such as intellectual property. Similarly, trade-secret action would likely fail because sharing an idea that may have commercial value with a potential competitor does meet the necessary proof element of whether the plaintiff took reasonable steps to maintain his idea’s secrecy.

A copyright infringement lawsuit would likely fail for similar reasons. Federal law extends copyright protection to works “fixed in any tangible medium of expression.” Don, however, could possibly pursue a common-law action against Freddie for misappropriation. This theory was at the heart of a years long legal battle between Taco Bell and a small design agency that claimed it invented the idea for the Taco Bell chihuahua.

If Don and Freddie were sophisticated–ha!–either one could have held an insurance policy that covered “advertising injury,” generally defined as the use of another’s idea in your advertisement or infringing on another’s copyright in your advertisement. Freddie could have invoked such a policy in case he had to defend himself against Don’s copyright infringement action. But Freddie needn’t worry. Don would likely have no viable action against Freddie, and the lesson is to keep one’s mouth shut until that brilliant idea has actually materialized into something tangible that merits legal protection.

Going forward, it’s worth noting that the current season of Mad Men takes place in 1969, before many of our current employment laws were even enacted. Title VII, however, was passed in 1964. As the season goes on, I’m sure my colleagues and I will be keeping an eye on Don’s replacement, Lou. Gladys Knight and the Pips? Oh my, such potential for race and gender discrimination lawsuits.