Connecticut Business Litigation Blog : Connecticut Business Lawyer & Attorney : N. Kane Bennett : Aeton Law Partners LLP : Hartford, Middletown, Glastonbury

I was tipped off by a reader that George Gombossy, the consumer columnist at Ctwatchdog, would be filing his wrongful termination suit against his former employer the Hartford Courant.  Sure enough, the lawsuit now has been filed and made its way around cyberspace today.  

Hartford Attorney Mark Dumas posted a copy of the lawsuit on Twitter.  You can read the lawsuit here (download).  You can also read about the suit at the Laurel and in a post by Christine Stuart at CTnewsjunkie.

Mr. Gombossy also posted the lawsuit on his new blog, ctwatchdog.com.  You can read Mr. Gombossy's comments on the suit here.  He claims that "Courant management attempted to pressure [him] from writing negative columns about key advertisers."  He claims that his termination followed after he wrote a column about Sleepy's that the Courant never published.  

The Courant denied the allegations according to an article today by Kenneth Gosselin. The Courant also issued a statement calling Mr. Gombossy's claims a "mischaracterization."

The focus of relief for Mr. Gombossy's lawsuit is Connecticut's free speech statute, which provides for damages in the event of termination for exercise of certain first amendment rights.   Dan Schwartz at the CT Employment Law Blog dissected the suit earlier today and provided a possible defense to the free speech claim. 

As noted by Dan Schwartz, nothing needs to happen in the lawsuit until November 13th, at the earliest, when the Courant has to file a response to the lawsuit.  Based on its statement on the case, it appears that the Courant intends to vigorously defend the suit.  We will have to watch how this case develops. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Connecticut has taken center stage as lead plaintiff in round two against six power companies for public nuisance over global warming.  In Connecticut v. American Electrical Power Co., eight States brought a lawsuit to stop ongoing contributions to global warming.  The States brought the suit under a theory of common law nuisance.  Although the case was dismissed at the trial level, the Second Circuit Court of Appeals overturned the decision and held that the States can pursue their claims for federal common law nuisance.

This case has been watched closely ever since it was filed in 2004 and argued in 2006.  The court of appeals decision allowing the case to proceed now has caused some very different reactions amongst attorneys, environmentalists and business leaders.   

The Global Climate Law Blog offered its comments on the decision noting that the case is long from over and future battles in the case will likely involve causation.  Hannah McCrea of The Grist noted  in a very detailed review of the case that it was a historic ruling to "be celebrated and utilized by environmentalists."  

Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform (representing 3 million businesses) issued this statement claiming the decision will "further line the pockets of trial lawyers."  She opined that the decision to permit public nuisance claims to go forward could lead to mass tort claims against businesses for contributions to global warming.  Seth Jaffe an environmental attorney with Foley Hoag offered a good legal review concluding that a number of defenses remain in the case for the power companies but environmental plaintiffs relying on nuisance claims may get new life from the decision.

My own take is that the case represents a fascinating intersection of law, politics, and activism surrounding the global climate change debate.   The case is being dissected all over the country with predictions of mass tort actions against businesses, congressional legislation, and new EPA regulations.  My own prediction is that the litigation appears far from over and an appeal to the United States Supreme Court is likely.  Any adverse impact to Connecticut businesses for nuisance claims is not at all clear at this point.  

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On Monday,  I attended the Connecticut Privacy Forum hosted by Travelers.  This Forum was a well attended inaugural meeting of privacy and data security professionals.  I came away from the meeting very impressed with the panel of speakers and topics on the agenda.  I also came away from the meeting as convinced as ever that data loss and security breaches pose a significant risk for nearly all businesses that use computers. 

In one of my earlier posts,  I touched on some of the risks involved for businesses related to data loss and security breaches.  I also offered some potential solutions.  At the Privacy Forum, data loss statistics were presented by the speakers and confirmed that these risks are very real for businesses.  Here is a sample of some of the statistics from 2008 alone:

• 80 million records were compromised
• 580 data loss or breach incidents were reported
• $202 per record was the average cost to business for loss or breach 
• 47% of the incidents involved corporations or businesses
• 33% involved compromised social security numbers 

The speakers also offered some of the solutions for businesses in terms of risk management and planning.  The seminar further included a detailed overview of federal and state laws covering privacy rights and data security.   You can access the presentation materials at ctprivacy.com 

Overall, this was a great event concerning a topic that will continue to be relevant to business litigation in the coming years.  Congratulations to the organizers, David Baker and Peter Bernstein, from Travelers on a well run event!

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Here is a round up of a few interesting business lawsuits making news in Connecticut this past week: 

Smoking Gun "Crap" Email In Case Watched by Wall Street

In Pursuit Partners, LLC v. UBS AG, et al., a 35 million dollar prejudgment remedy was awarded in favor of a Connecticut hedge fund against UBS.  Judge Blawie issued the order in Stamford Superior Court after finding the bank was in possession of material non-public information regarding downgrades to financial products that UBS continued to sell.  This case is getting a lot of attention on Wall Street and reported on by Matthew Goldstein  at seekingalpha.com and Serena NG and Carrick Mollenkamp on WSJ.com. 

The UBS case will be interesting to watch and is another example of the increasing importance of discovering smoking gun emails.  Preliminary discovery in the case turned up internal emails calling some of the financial products "crap."   Here is a docket report on the case. (download).

Fairfield Company Uncovers Fraud and Ejects Board Member

Competitive Technologies (CTT), won a contested default judgment for more than $4 million dollars after discovering a former board member took company money and invested it in a fictitious South American company that did not exist.  Read the report on the case by Michael Juliano of the Connecticut Post.  You can also download here a copy of the judgment from Judge Dorsey who found that the defendants willfully disregarded court orders.  

The fraud was uncovered in part by the work of Breen & Associates.  I have worked with Bill Breen before on several cases.  He is an exceptional fraud investigator and expert.  Looks like he successfully uncovered another financial fraud for a business client.   

Civil Rights Violations Alleged Against Litchfield In Refusing Jewish Temple

Rabbi Joseph Eisenbach has filed a lawsuit in federal court against the Town of Litchfield over the Town's refusal to permit modification of his property for religious purposes.  The complaint (download here) states that the Rabbi is seeking declaratory relief, permanent injunction, and damages for violations of civil rights and the Religious Land Use and Institutionalized Persons Act of 2000.  This case was reported on by Christine Stuart, editor of  CTNews Junkie where a reader left some disturbing comments about anti-semitic statements at the commission hearings on the matter. 

An attorney for the Town has not yet appeared in the case and no answer has been filed. Given the allegations in this Complaint, this is a case that is likely to stay in the news. 

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

Former Professional Wrestler Hulk Hogan has filed a lawsuit against his own attorneys for failing to advise him of the potential for insurance coverage for defense costs in an auto accident case.  The case was reported on by Curtis Krueger of the St. Petersburg Times as well as several wrestling sites including  tblwreslting.com and Shawn Moniz of wrestlingnewsarena.com.   

According to the reports, Hulk Hogan's son, Nick Bollea, was in a car crash in 2007 that caused serious injuries to his friend, John Graziano.  Hulk Hogan was sued along with his son for the damages.  It appears that Hulk Hogan privately retained and paid his for private lawyers to defend him in the case.

Hulk Hogan's suit alleges that he could have received a qualified defense attorney for free because his insurance company would have paid the bill.  As with most automobile insurance policies, unless there was some valid reason to deny Hulk Hogan a defense, his insurance company would have been obligated to provide a lawyer to be paid by the insurance company. 

If you are faced with a claim that is covered by an insurance policy, you must submit the claim to the insurance company if you want to get coverage or a defense.  Once you submit the claim to your insurance company, the company would then either deny coverage, provide limited coverage, or provide a defense attorney and coverage.  In insurance circles, it is called providing an insured with "defense and indemnity."  This means, not only providing a lawyer at no cost, but the insurance company will pay the damages up to the policy limits if there is a settlement or judgment.

It is unclear how Hulk Hogan's suit is going to turn out, and only his allegations are known at this point.  The lawyers he sued have adamantly denyied any wrong doing.  Only time will tell what the real story is behind the decision to forgo an attorney appointed by his insurance company.

Nevertheless, the lesson from Hulk Hogan's lawsuit is clear.  Whether you are an individual or business owner, if you are faced with a lawsuit of any kind you should:

• Contact your insurance agent as soon as possible
• Determine if you have any available insurance coverage
• Provide notice of the claim to the insurance company
• Consult with an attorney about the availability of insurance coverage

Many times, I consult with business clients who are not aware of what types of claims might be covered by an insurance policy.  Determining the availability of insurance coverage is an important first step when faced with any loss or lawsuit.  Many times, determining whether coverage exists can be complicated and consulting an attorney may be necessary.  Additionally, early notice to the insurance company is important.  If you delay notifying the insurance company, the company may seek to deny coverage based on lack of timely notice of the claim prejudicing the insurance company. 

Hulk Hogan's case also serves as a reminder for individuals and businesses to review what insurances they have and determine if the coverages are adequate for both personal and business operations.  There are many types of insurance products on the market that business owners are not aware of or sometimes believe are too expensive.  You also need to make sure that the policies you purchase will protect the likely losses or damages claims you might face. 

Working with an insurance agent or a business attorney can help you determine potential insurance policies that might protect your company.  There are many types of insurances available for businesses, including policies that cover first and third party claims. 

TYPICAL INSURANCE AVAILABLE FOR CONNECTICUT BUSINESS:

• Commercial General Liability
• Workers' Compensation
• Director's and Officer's Liability
• Employer's Practices Liability
• Products and Completed Operations
• Umbrella and Excess Liability
• Cyber Liability and Technology Errors
• Property Insurance
• Business Interruption and Indirect Loss Coverage
• Environmental Risk
• Intellectual Property Liability
• Ocean Marine

Once a decision to purchase insurance is made, you should have an insurance management plan in place.  At its simplest form, this amounts to having all your insurance polices, and proof of premiums paid, organized and cataloged in one place.  Your insurance portfolio should be reviewed periodically, or at least annually, to make sure there are no gaps in coverage.  It also is a good idea to have an annual review with an insurance agent or attorney to make sure you have the most updated coverages.  

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In Saunders v. Firtel, a decision to be officially released on September 22, 2009, the Connecticut Supreme Court upheld an award of double damages under Connecticut's wage and hour laws in what amounted to a dispute between two business partners, Barry Saunders and Burton Firtel.  The supreme court also upheld judicial dissolution of a company owned by the partners.  The case highlights the complications that can arise between partners when one partner is also an employee in the business.  

In this case, Saunders became part owner of a company that Firtel previously formed by himself.  Saunders also became an employee of the company as part of a larger business relationship.  This is not an uncommon arrangement in business, especially when a small business is purchased by a larger company.    Saunders and Firtel also formed another limited liability company together as equal owners. The business relationship was documented with an operational agreement. 

Although the partners successfully operated the business for years, a dispute arose out of unpaid wages after Saunders unsuccessfully tried to change the compensation structure of the business relationship.  In response, Firtel fired Saunders.  Saunders brought a lawsuit in Connecticut state court for unpaid wages claiming he was an employee.  He also sought to dissolve the limited liability company formed with Firtel. 

A few months ago, Connecticut's wage and hour laws were in the national spotlight because of the scandal with AIG's bonus plan for its employees in Wilton, Connecticut.    AIG claimed that it had to pay the bonuses because it feared double damages under Connecticut's wage and hour laws.  In this instance, Saunders brought his case in court relying on the same provisions that AIG feared. 

Connecticut's unpaid wage law, General Statutes section 31-72 ,provides that:

When any employer fails to pay an employee wages . . . the employee may recover, in a civil action, twice the full amount of such wages, with costs and such reasonable attorney's fees as may be allowed by the court . . 

To recover double damages, although not mentioned in the statute, courts require a finding of bad faith, arbitrariness, and unreasonableness by the employer.  In Saunders' case, he won because the trial court found that the failure to pay was willful.  What might seem strange about the case is that Saunders was not only an employee, but he was also a 49% stockholder and an officer in the company he sued to obtain double damages.  Firtel was a 51% owner, and the President. 

Dan Schwartz's Employment Law Blog has a nice summary of the supreme court's treatment of how Saunders qualified as an employee as well as the implication of the decision on employers.  I tend to agree with Dan that there is no significant impact on employers because if wages are earned, the wages should be paid regardless of the business relationship.

I think the case does highlight important considerations for business partners.  The case demonstrates how a breakdown in the relationship between two business partners can turn into a dispute where one partner effectively ends up in the shoes of the employer subject to wage and hour laws.  This was probably not intended and it is unlikely that Saunders and Firtel viewed themselves as employee and employer.  In fact, they appeared to be nearly equal partners.

The case is also another example of a once successful business partnership ending in arguments over compensation and written agreements.  It further shows that dissolution of a company is another judicial remedy, along with disassociation and expulsion in partnerships, for a company that can no longer operate in a practical manner. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Unfortunately, all too often business competitors resort to unfair and improper tactics to gain an advantage in business.  A common example occurs when a competitor maliciously or intentionally interferes with a company's contracts or business relationships.   When this occurs, businesses have to consider whether a legal remedy is available.

In Connecticut, courts have long recognized the business litigation claim of tortious interference with contractual relations as an available remedy for this type of conduct.  To be successful against a competitor in a lawsuit for this claim, a business must prove three essential elements:

• Existence of a contract or beneficial business relationship
• Knowledge of the relationship
• Intentional interference with the contract or business relationship
• Actual loss or damage 

Upon first consideration, tortious interference with a contract might seem to apply to many business competitors.  However, Connecticut courts require more than mere interference for a successful lawsuit.  In particular, not every act of interference is actionable in court. 

In Connecticut, a business must also prove that the interference was "improper" or with an "improper motive."   A business can prove that interference with a contract was improper by demonstrating any of the following:

• Fraud or misrepresentation
• Intimidation
• Malice
• Other improper motive or means

Although the improper motive element is harder to prove, a successful claim could also result in an award of punitive damages.  Additionally, a business does not have to prove that the interference actually resulted in a breach of the contract or business relationship.

As such, if your business is dealing with a competitor that has crossed the line and resorted to fraud or unfair practices to harm your business, a lawsuit for tortious interference with contractual relationship is one of the available remedies in Connecticut.   

• Email This
• Print
• Comments
• Trackbacks
• Share Link