Justia Labor & Employment Law Opinion SummariesArticles Posted in Delaware Court of Chancery
Ogus v. SportTechie, Inc.
In 2012, Ogus cofounded the SportTechie website. Bloom volunteered as a writer. Eventually, both quit their other jobs. They formed an LLC with Bloom a 55.5% member, and Ogus a 45.5% member and sole manager. They hired Kaufman. Vintage and Oak View made financial investments. In 2016-2017 Ogus converted SportTechie from an LLC to a Delaware corporation and appointed three directors: Bloom, a Vintage representative, and Bodie, Oak View’s designee. A stockholders agreement gave SportTechie the right to repurchase Ogus’s equity interest if he were terminated. Bloom—SportTechie’s CEO— recommended firing Ogus for poor performance. A quorum of the board authorized the termination of his employment. SportTechie exercised its option to repurchase Ogus’s stock.A chancellor dismissed Ogus's fiduciary duty and fraud claims challenging the stock repurchase and subsequently granted Bodie and Oak View summary judgment on a fraud claim, breach of fiduciary duty claims, an aiding and abetting claim, and a civil conspiracy claim. Those defendants had limited, innocuous roles in the relevant events. Bodie’s decision to sign the consent terminating Ogus is protected by the business judgment rule; there is no evidence of bad faith or self-interest. With no underlying breach of fiduciary duty claim, the aiding and abetting claim against Oak View and the civil conspiracy claim against Oak View and Bodie necessarily fail. As to Bloom and Kaufman, questions of material fact remain, precluding summary judgment on fraud, breach of fiduciary duty, and civil conspiracy claims. View "Ogus v. SportTechie, Inc." on Justia Law
Posted in: Business Law, Delaware Court of Chancery, Labor & Employment Law
Evans v. Avande, Inc.
Evans served as CEO and a director of Avande, a privately held Delaware corporation that provides medical claims management services to insurance companies and healthcare organizations. Following Evans’s termination, Avande performed an audit and discovered suspect transactions undertaken by Evans while he was serving as CEO. Avande filed suit, alleging breach of fiduciary duty based on alleged self-dealing transactions and improper expenditures and tortious interference, defamation, and conversion based on acts that Evans allegedly committed after his termination. Evans was found liable for about $65,000 in damages, plus interest. Evans demanded advancement for expenses incurred in connection with the action.The Delaware Chancery court entered judgment in favor of Avande. Avande established that there is no causal link between Evans’s status as a former officer of Avande and the tortious inference and defamation claims; those claims solely concerned Evans’s post-termination conduct. Avande demonstrated that Evans did not succeed but was found liable. View "Evans v. Avande, Inc." on Justia Law
Kroll v. City of Wilmington
The Court of Chancery granted Defendants' motion to dismiss this amended complaint brought by Plaintiff seeking a determination that Defendants - the City of Wilmington, the Wilmington Police Department, and the mayor of the City - breached the collective bargaining agreement between the police union and the City when he was terminated for an alleged violation of the City's resident requirement, holding that this Court lacked subject matter jurisdiction.Specifically, the Court of Chancery held that Plaintiff's claims fell within the grievance procedure and were therefore subject to arbitration, and where Plaintiff did not follow the grievance process that was provided in the collective bargaining agreement, a complete remedy otherwise existed in the form of the grievance process outlined in the agreement. View "Kroll v. City of Wilmington" on Justia Law
Focus Financial Financial Partners, LLC v. Holsopple
The Court of Chancery granted Hightower Holdings, LLC's motion to dismiss this action under Rule 12(b)(3) based on the doctrine of forum non conveniens, holding that Hightower carried its burden to show that it would suffer overwhelming hardship from being forced to litigate this action in Delaware under the circumstances presented.This litigation arose when Scott Holsopple left his employment with Focus Operating, LLC (Focus Sub) and took a job with Hightower Holdings, LLC. Focus Financial Partners, LLC (Focus Parent), the publicly traded parent company of Focus Sub, filed this lawsuit against Holsopple and Hightower. Five days later, Holsopple and Hightower filed an action against Focus Parent in a California court, seeking declarations that restrictive covenants and Delaware-forum and Delaware-law provisions in a unit agreement Holsopple signed when joining Focus Sub were invalid and unenforceable under California law. Focus Parent then filed a second amended complaint asserting, among other things, claims for breach of the Delaware-forum provisions. Hightower moved to dismiss this action under the doctrine of forum non conveniens. Holsopple was subsequently dismissed from the lawsuit. The Court of Chancery granted the motion, holding that, under the circumstances, it would impose overwhelming hardship if Hightower were forced to litigate a less advanced case in this jurisdiction. View "Focus Financial Financial Partners, LLC v. Holsopple" on Justia Law
Posted in: Delaware Court of Chancery, Labor & Employment Law
Focus Financial Financial Partners, LLC v. Holsopple
The Court of Chancery granted Scott Holsopple's motion for dismissal from this case, holding that this Court lacked any basis to assert personal jurisdiction over Holsopple.Holsopple previously worked for Focus Operating, LLC, a subsidiary of Focus Financial Partners, LLC (Focus Parent). During his employment with Focus Operating, Holsopple signed five Unit Agreements, two of which selected the courts of Delaware as the exclusive forum for disputes relating to the Unit Agreements. By signing the agreements, Holsopple because a member of Focus Parent. The two most recent iterations of Focus Parent's operating agreement selected the Courts of Delaware as the exclusive forum for disputes relating to the operating agreements. After Holsopple took a position with Hightower Holdings, LLC, a competitor of Focus Operating, Focus Parent filed this lawsuit alleging, among other things, that Holsopple violated the employment-related provisions in the Unit Agreements and violated the exclusive choice-of-forum provisions by filing a lawsuit in California state court. Holsopple filed a motion to dismiss for lack of personal jurisdiction. After a choice-of-law analysis, the Court of Chancery granted the motion, holding that the Delaware choice-of-forum provisions could not support jurisdiction. View "Focus Financial Financial Partners, LLC v. Holsopple" on Justia Law
AFSCME, Council 81, Registered Nurses Unit, Local 2305 v. State, Dep’t of Health & Soc. Servs.
Petitioner worked as a charge nurse at a facility of the State’s Department of Health and Social Services (DHSS). After an incident with a patient who later died, DHSS concluded that Petitioner should be dismissed for patient neglect, failure to perform a thorough assessment of the patient’s condition, and unprofessional and unacceptable behavior. Petitioner’s employment was governed by a collective bargaining agreement (CBA) between a union and HDSS. After arbitration as prescribed by the CBA, the arbitrator concluded there was just cause for Petitioner’s dismissal. Petitioner brought this action challenging the arbitrator’s decision. The Court of Chancery granted summary judgment in favor of DHSS, holding that the arbitrator (1) correctly held DHSS to its burden to demonstrate good cause for termination in reaching his decision; (2) applied the correct standard of care as to the definition of “neglect”; and (3) necessarily rejected Petitioner’s effort to obtain back pay. View "AFSCME, Council 81, Registered Nurses Unit, Local 2305 v. State, Dep't of Health & Soc. Servs." on Justia Law
Costantini, et al. v. Swiss Farm Stores Acquisition LLC
Plaintiffs Costantini, Jr. and Kahn sought indemnification for their fees and costs in underlying litigation involving Swiss Farm. The court concluded that Costantini was entitled to indemnification under Article 14 of the Operating Agreement because he was a manager of Swiss Farm and was sued by Swiss Farm in that capacity and prevailed. However, the court concluded that, although Kahn was sued for breach of fiduciary duty and prevailed, he was not a member of the Board of Managers, an officer, an employee or an agent of the company and, therefore, was not entitled to indemnification under the Operating Agreement. Accordingly, the court granted in part and denied in part plaintiffs' motion for judgment on the pleadings. View "Costantini, et al. v. Swiss Farm Stores Acquisition LLC" on Justia Law
Council 81, AFL-CIO v. State
Employee was employed by the State's Department of Services for Children, Youth, and their Families (Department). After Employee was injured during the course and scope of his employment, the Department concluded that Employee did not make a sufficient return to work and terminated him. Employee's termination was subject to arbitration under the collective bargaining agreement between the Department and Council 81, the exclusive bargaining agent for certain Department employees. The arbitrator upheld Employee's termination, finding just cause for Employee's dismissal. Council 81, acting on behalf of Employee, challenged the arbitrator's decision. The Court of Chancery granted summary judgment for the State, holding that Council 81 failed to offer a recognized basis for setting aside the contractually bargained for arbitrator's decision. View "Council 81, AFL-CIO v. State" on Justia Law
Am. Fed’n of State, County, & Mun. Employees v. State
The State and its agencies were parties to collective bargaining agreements that provided for overtime compensation after 37.5 hours of work per week and, in some cases, a career ladder which promoted employees based on certain requirements. In 2009, the State changed the minimum for overtime hours from 37.5 to forty hours per week and temporarily froze the career ladder. In response, the union filed two unfair labor practice charges for the State's failure to negotiate in good faith. The public employment relations board dismissed both charges. The Court of Chancery affirmed, holding (1) the State is not required to bargain over nonmandatory subjects; and (2) overtime compensation issues here are nonmandatory subjects of collective bargaining. View "Am. Fed'n of State, County, & Mun. Employees v. State" on Justia Law
Posted in: Delaware Court of Chancery, Labor & Employment Law
Nuvasive, Inc. v. Lanx, Inc.
NuVasive alleges that Lanx improperly persuaded NuVasive employees and a NuVasive consultant to leave NuVasive and work for Lanx instead, in breach of agreements that the employees had with NuVasive, to misappropriate NuVasive’s trade secrets and other proprietary information. Both are medical corporations. NuVasive claimed unfair competition, tortious interference with contractual relations, tortious interference with prospective contractual relations, aiding and abetting breach of fiduciary duty, civil conspiracy, and misappropriation of trade secrets. Lanx argued that the former NuVasive employees were necessary and indispensable parties to the action because NuVasive’s claims are predicated upon their acts. The chancellor declined to dismiss. While the former employees’ interests are not adequately protected by Lanx, the chancellor reasoned that a remedy could be crafted to avoid prejudice to their interests. The former employees were not indispensable to the misappropriation claim.