In December 2023, the Delaware Chancery Court tees up a potentially major shift in non-compete disputes, Disney, Miramax and others try to distance themselves from Harvey Weinstein, and the 10th Circuit sets limits to “reasonable” under ADA accommodation law. See what happened at the close of the year below.
Delaware Chancery Court Urges Swift Appeal in Noncompete Dispute, Asserting “Unsustainable” Trend of Using Delaware Courts for Legal Disputes
The Delaware Chancery Court has recommended a midcase appeal to the state’s highest court in the dispute between Sunder Energy LLC and former executive Tyler Jackson. The court cites the need for guidance on “substantial” legal questions and expresses concern about the “problematic and unsustainable” trend of companies using Delaware’s legal system to bypass other states’ laws in noncompete disputes. Vice Chancellor J. Travis Laster ruled in favor of allowing Sunder to appeal the denial of a preliminary injunction to the Delaware Supreme Court, emphasizing the “substantial issue of material importance” involved. The dispute revolves around noncompete covenants in Delaware LLC agreements and highlights the growing reluctance of the Chancery Court to modify such clauses. The case raises questions about whether the nearly 2 million businesses chartered in Delaware can rely on the state’s courts to enforce restrictive provisions. The court acknowledges the conflict between Delaware’s interests and the individual interests of clients and their lawyers in using Delaware’s legal regime for resolving disputes.
The case is Sunder Energy LLC v. Tyler Jackson et al., case number 2023-0988, in the Court of Chancery of the State of Delaware.
Disney and others Move to Dismiss Negligent Supervision Case relating to Harvey Weinstein Assault
In a legal battle related to Harvey Weinstein’s alleged sexual assault on actress Julia Ormond in 1995, The Walt Disney Co., Creative Artists Agency (CAA), and Miramax are jointly seeking dismissal of the lawsuit. Weinstein, the former co-chairman of Miramax, is serving a prison sentence for sexual assault convictions. Ormond claims that Disney, CAA, and Miramax did not protect her from Weinstein’s abuse.
The defendants argue that they are not responsible for the alleged assault, with Disney asserting that Ormond failed to demonstrate that Weinstein was a Disney employee or that the company had direct control over him. Disney contends that Miramax and Disney were separate entities, emphasizing the critical distinction between them.
Ormond, a well-known actress in the 1990s, asserts that she signed a production deal with Miramax without being warned about Weinstein’s predatory behavior. She alleges that her agents and CAA were aware of previous settlements but did not inform her. The lawsuit, filed under New York’s Adult Survivors Act, includes claims of battery against Weinstein, negligent supervision and retention against Miramax and Disney, and negligence and breach of fiduciary duty against CAA.
Disney argues that it cannot be held liable for Weinstein’s actions as he was not its employee, and it was unaware of his past misconduct. Miramax and CAA also challenge the sufficiency of the allegations against them, denying negligence and arguing that they had no knowledge of Weinstein’s history before the assault. The legal battle underscores the complex issues surrounding corporate responsibility and accountability in cases of sexual misconduct.
The suit is Julia Ormond v. Harvey Weinstein et al., case number 952107/2023, in the Supreme Court of the State of New York, County of New York.
Request for “Open-ended” leave Too Unreasonable for ADA Protection
In a recent decision, the Tenth Circuit upheld the dismissal of a former casino worker’s Americans with Disabilities Act (ADA) lawsuit, stating her accommodation request for managing asthma attacks was “unreasonable.” Danielle Davis, a table-games dealer, sought accommodations allowing her to miss work during asthma flare-ups and to erase attendance points accumulated due to previous health-related absences. The court rejected her claim, deeming the request for “open-ended” leave incompatible with the essential job function of regular attendance. Davis argued against the importance of attendance in her role, but the court cited the casino’s vice president of human resources, emphasizing its critical role in the core gambling service. The decision highlights the need for employees to demonstrate that attendance expectations are non-essential by proving inconsistent enforcement or lack of business necessity, which Davis failed to do. Additionally, the court rejected Davis’s plea to erase attendance points, stating that ADA does not mandate disciplinary record resets predating accommodation requests. The panel also declined to revive her disability bias claim, emphasizing her termination’s alignment with company policies rather than prejudice.
The case is Davis v. PHK Staffing, case number 22-3246, in the U.S. Court of Appeals for the Tenth Circuit.
Jeff Burke is an attorney at MacElree Harvey, Ltd., working in the firm’s Employment and Litigation practice groups. Jeff counsels businesses and individuals on employment practices and policies, executive compensation, employee hiring and separation issues, non-competition and other restrictive covenants, wage and hour disputes, and other employment-related matters. Jeff represents businesses and individuals in employment litigation such as employment contract disputes, workforce classification audits, and discrimination claims based upon age, sex, race, religion, disability, sexual harassment, and hostile work environment. Jeff also practices in commercial litigation as well as counsels business on commercial contract matters.
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