Wrongful Termination Lawsuit Reveals Wal-Mart's Surveillance Practices
You may not recognize Julie Roehm’s name, but chances are you know about her employment and termination by Wal-Mart, and the litigation that has revealed Wal-Mart’s aggressive surveillance practices.
In January 2006, Wal-Mart hired Roehm, a highly-regarded advertising executive, from Daimler Chryler Corporation, as its senior vice-president of marketing communications. By all accounts, she was shaking things up at a company that understood that it needed to move past its 1950s model of marketing.
But in December, Wal-Mart fired Roehm and her protégé, Sean Womack, and terminated its relationship with DraftFCB, an advertising agency she had hired. Wal-Mart alleged that Roehm and Womack had an impermissible personal relationship, and that DraftFCB had provided gifts to Roehm, in violation of Wal-Mart’s stringent gratuity policy. Here is The Wall Street Journal’s article from December 11, 2006, which provided some background. According to the article, Roehm did not have an employment contract or any severance agreement with Wal-Mart.
On December 15, 2006, Roehm filed suit against Wal-Mart in Oakland County, Michigan state court. She alleged that she was a Michigan resident who had relocated to Arkansas temporarily to work for Wal-Mart, which made venue in Michigan appropriate. Wal-Mart removed the case based on diversity of citizenship, and asserted a counterclaim against Roehm alleging breach of fiduciary duty. She then filed an amended complaint against Wal-Mart asserting breach of contract, breach of the duty of good faith and fair dealing, fraud and misrepresentation, claim and delivery, and gender discrimination in violation of Arkansas law. According to the complaint, Roehm had signed a Post-Termination Agreement and Covenant Not to Compete before commencing work for Wal-Mart. (Although not mentioned in the complaint, the agreement contained a forum selection clause requiring any litigation to take place in Benton County, Arkansas.)
In June, the federal court granted Roehm’s motion to remand on the grounds that Roehm was domiciled in Arkansas (because diversity of citizenship is based on domicile and not on residence), so there was no diversity of citizenship between Roehm and Wal-Mart, and sent the case back to state court.
In state court, Wal-Mart moved to dismiss on the grounds of forum non conveniens and the forum selection clause contained in the Post-Termination Agreement. The court granted the motion and found that "Arkansas is the appropriate, convenient forum[,]" rejecting Roehm’s argument that Wal-Mart had waived the defenses by failing to assert them in federal court and by not asserting them on a timely basis. The case will now be litigated in Benton County, Arkansas, where Wal-Mart is headquartered. Here is The Journal's Law Blog's post about the ruling and its consequences for Roehm.
Second, this case illustrates some of the hurdles that a plaintiff in a wrongful termination or other employment-related lawsuit may face. Although Wal-Mart's approach represents the extreme (at least I hope it represents the extreme), I don't understand why Roehm would have gone to work for Wal-Mart without an employment contract or something that afforded her more rights than the Post-Termination Agreement. Some employers don't or won't offer employment contracts, in which case the employee takes the position and the attendant risk or leaves it, which may have been Roehm's situation. But for a senior executive who was leaving 11 years of employment with a major corporation for a comparable, if not better, situation, I question how much negotiation took place between Roehm and Wal-Mart regarding the terms and conditions of her employment. Because I don't expect her to do very well in Benton County, Arkansas against Wal-Mart.
