Dukes v. Wal-Mart -- Ninth Circuit Approves Largest Gender Class Action in U.S. History

On Monday, the long running Dukes v. Wal-Mart gender class action, first filed in 2001, was approved as a class action by a 6-5 vote of the en banc Ninth Circuit Court of Appeals in California.  As a result, Wal-Mart now faces the potential for an over one million member gender class action challenging Wal-Mart's pay and promotion practices.  The certified class involves female Wal-Mart employees employed in any of Wal-Mart's domestic retail operations since December 26, 1998.  The en banc decision was the third finding that certification was proper and followed the District Court's 2004 and three judge panel's 2007 findings that class certification of the potential 1.6 million member class was proper.  Pay disparity, promotional discrimination, and gender inequity in all terms and conditions of employment will now be pressed by lead counsel on behalf of the largest gender discrimination class in United States history.

Court Dismisses Brokers' Complaint Alleging That Citigroup Promissory Notes Are Unconscionable

In a stern opinion, District Judge Lewis Kaplan rejected all of the arguments asserted by six former Citi brokers and dismissed their complaint seeking to unwind their promissory note obligations to Citi. See Banus v. Citigroup Global Markets, Inc., 2010 U.S. Dist. LEXIS 40072 (S.D.N.Y. Apr. 23, 2010). The decision is significant in that it challenged Citi's promissory note/up front compensation program on a global basis as unconscionable and against public policy. The Court rejected those contentions. Moreover, the Court ruled that whether or not the underlying arbitrations should be stayed in favor of a putative class action litigation, based on FINRA Rule 13204, rested in the capacious discretion of the arbitration panel. The Court ruled it was not error by one arbitration panel to deny a stay in favor of the putative class action challenging the enforceability of the Citi up front compensation program. The long and short of this decision may well be that challenging the legitimacy of an up front compensation program -- on a global basis -- may not succeed given that the brokers have the opportunity to review the documents, consult with a lawyer, consider alternative options, and take and spend the money. However, and most significantly, individual challenges to up front compensation claims still remain viable. Individual claims, such as (i) whether a broker was fraudulently induced to join a firm, (ii) whether a broker was provided with that which she was promised, (iii) whether a broker was treated and compensated in the manner contemplated, and (iv) whether the broker was subject to a material alteration of employment still remain legitimate ways to challenge up front compensation claims asserted by financial institutions.

Societe Generale Trader Arrested for Misappropriating Trade Secrets

Yesterday, April 19, 2010, a former Societe Generale Group quantitative analyst was arrested in New York for allegedly misappropriating the company's proprietary computer code related to its high frequency trading system. The arrest provides several valuable lessons for employees. First and foremost, the misuse and/or misappropriation of a company's proprietary information is against company policy and may lead to civil litigation, BUT IT IS ALSO criminal and may lead to prison time. Second, proprietary trading systems are incredibly valuable to financial services companies and will be guarded and aggresively protected. While the FBI was involved in this matter, the escalation was probably based on the fact it involved the company's very profitable trading system. The FBI may not have been summoned and involved had the misappropriation involved an individual employee's client list. The long and short of this situation is that whether or not there are restrictive covenants, company policies, or written agreements, it is simply unlawful and criminal to take a former employer's property. It cannot and should never be done and the consequences of such action are much graver than being a civil defendant in an employment dispute.

New Jersey Supreme Court Protects Employee's Privileged E-Mail Communications on Company Computer

The New Jersey Supreme Court recently handed down a significant decision addressing whether a company e-Mail policy can trump the attorney-client privilege between an employee and her personal attorney hired to sue the company for employment discrimination. See Stengart v. Loving Care Agency Inc., A-16-09. The court ruled the company could not and ruled the employee was entitled to invoke the privilege with respect to e-Mails she authored and received from a company computer via a personal password protected e-Mail account. The Court provided:

"even a more clearly written company manual -- that is, a policy that banned all personal computer use and provided unambiguous notice that an employer could retrieve and read an employee's attorney-client communications, if accessed on a personal, password-protected e-mail account using the company's computer system -- would not be enforceable."

The Court went further. The Court ruled that the company's attorneys violated ethics rules by not returning the e-Mails without reviewing them. New Jersey's high court has remanded the case to the trial court to determine whether disqualification of the company's law firm is required given its review of the privileged e-mails.