West Virginia Business Litigation : West Virginia Business Litigation Lawyer & Attorney : Law Office of Jeffrey V. Mehalic : Charleston, Huntington, Parkersburg

For much of this month, we watched as, for better or worse, NBC dismantled its late-night programming schedule, when it attempted to move Conan O'Brien and "The Tonight Show" to 12:05 a.m. from its traditional slot at 11:35 p.m. in order to move "The Jay Leno Show" from 10 p.m. to 11:35 p.m.

As everyone knows now, O'Brien would not agree to move "The Tonight Show" to a later time, and his final show aired last Friday night. According to media reports, NBC paid O'Brien a total of $45 million; he will get approximately $33 million and the balance will go to his 200-person staff for severance payments.O'Brien can return to television on September 1 when his non-compete expires. After the Winter Olympics end, NBC will air Leno's show in the 11:35 p.m time slot.

I am particularly pleased today to share a brief interview I conducted with Patricia Glaser, name partner and litigation department co-chair at Glaser, Weil, Fink, Jacobs, Howard & Shapiro, LLP in Los Angeles, who represented O’Brien in his negotiations with NBC. 

Patricia is a native of Charleston, West Virginia, and attended Rutgers University Law School. She clerked for United States District Judge David W. Williams of the Central District of California, after which she practiced at Wyman, Bautzer, Christensen, Kuchel & Silbert until 1988, when her current firm was formed. Patricia was kind enough to agree to answer a few questions, and I thank her for her time.

Q.     How did you get into entertainment law?

A.      I don't consider myself an entertainment lawyer. I'm a business trial  lawyer. If you're in Los Angeles, and you don't do some matters related to entertainment, it's surprising. The studios are here, TV is here, production companies are here, and artists are here. So you're going to touch on it in your practice.

Q.     How would you describe your practice, both in terms of what you do and the composition of your client base?

A.      When you litigate in entertainment cases, the jargon is distinct, but a contract is a contract, antitrust and securities law principles are the same no matter in which industry one is litigating. Those things don't change. In my practice, I would say I touch on entertainment matters in about 40% of my cases.

Q.     In your most recent high-profile case, you represented Conan O'Brien in his dispute with NBC. How long have you represented Conan?

A.      I represented Conan regarding potential litigation with NBC. I am not his transactional lawyer, and he's not particularly litigious.

Q.     Can you provide any specifics on the terms of Conan's settlement beyond what have been reported?                                                                                                                                                                         

A.     No. 

Q.     When your client is a celebrity, does his or her status or fame affect your representation -- or are the issues in a dispute the same regardless of who your client is?

A.      It depends on the client and the context of the dispute. Some celebrities in some cases are so concerned with public perception and therefore how a conflict is perceived is an important consideration in the overall strategy of a case. In cases where a celebrity is involved, public relations is more often a factor than in other types of business disputes.

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A few days ago, I wrote about the dismissal of Charter Oak Lending's lawsuit against a larger rival for alleged misappropriation of proprietary information and other claims. The outcome of Charter Oak's lawsuit demonstrates the perils of trade secrets litigation.

With that case in mind, I want to share an end-of-the-year post from Nancy Geenen, one of the authors of Foley & Lardner LLP's Trade Secret/Noncompete Blog, which explains why a company needs a trade secret protection program and how to implement one. I would add that even if a company doesn't have trade secrets, which Nancy defines as "formulas, devices, methods, techniques, or processes," more than likely it has information that it wants and needs to keep confidential, such as clients' or customers' names, operating agreements, financial records, etc., which could be included in such a program.

By the way, Nancy is also the author of an article I discussed last week about the need for your engagement letter to accurately describe the scope of your representation. 

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Today I want to bring to your attention two new decision from the Supreme Court of Appeals of West Virginia, which deal with the substance and procedure of the arbitration process.

In the first opinion, State ex rel. Clites v. Clawges, 2009 WL 3320488 (W.Va. 2009), Clites was hired as a customer service representative of TeleTech, and participated in a group employee orientation session that included the discussion and completion of employment-related paperwork. After nearly three years of employment, however, TeleTech terminated Clites. She filed suit and alleged that her termination was due to a sexual harassment complaint she had filed against TeleTech.

TeleTech moved to dismiss and/or stay Clites' lawsuit because she had signed an arbitration agreement that required her to arbitrate and to give up her right to a jury trial. The agreement provided that the arbitration would be conducted by an American Arbitration Association arbitrator in the city where the employee is employed, and that each party would bear its own fees and costs, except that the arbitrator would have discretion to award fees and costs to the prevailing party as provided by law.

The Circuit Court of Monongalia County, West Virginia denied the motion to dismiss and granted the motion to stay. The court found that the arbitration agreement was a contract of adhesion, but that TeleTech had stipulated through an affidavit that the arbitration would take place in Morgantown, West Virginia and that TeleTech would pay for all costs that would not be incurred by Clites in court, such as the cost of the arbitrator, the hearing room, and stenographer.

Clites sought a writ of prohibition against the court's order on the grounds that the arbitration agreement was a contract of adhesion with unconscionable terms and therefore was unenforceable. She asserted that a reference in the agreement to Denver, Colorado required the arbitration to take place there and that she was responsible for fees and costs in excess of what she would have to pay in a civil action.

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When I first looked at the Supreme Court of Appeals of West Virginia's decision in Timberline Four Seasons Resort Management Co. v. Herlan, 679 S.E.2d 329 (W. Va. 2009), which was issued at the end of the January Term, I did not realize its holding was quite so limited. But the facts are interesting and its discussion of an agency relationship is informative.

Timberline Four Seasons, a resort in eastern West Virginia, hired Pat Herlan as a real estate broker in 1991. Even though Herlan was employed until 2007, there was a written employment contract between the parties only from 1994 to 1996. In 2000, Herlan incorporated Timberline Resort Realty, Inc. and Timberline Realty, Inc.

Timberline Four Seasons claimed that Herlan was paid for the brokerage services she provided, while she claimed that her salary was for promotional work for the resort and for serving as a liaison between the resort and independent real estate developers. She asserted that she could not have been a broker for the resort, as she was neither an owner or officer, and that the resort itself could not have engaged in the real estate brokerage because it did not have a licensed broker as an owner or officer.

For whatever reason, in 2007, the resort asked Herlan to vacate her office. When she left, she took certain business records with her and also hired a computer technician to remove and delete some information from the computer in her former office and install it on the computer in her new location, at a cost of $25,000. She also took her former telephone numbers with her.

The resort and another plaintiff, Long Run Realty (whose role is not described) sought an injunction against Herlan and her businesses, which the circuit court denied on the grounds that Timberline Resort Realty was not owned or controlled by the resort and thus was not an agent under the resort's control as to the real estate brokerage functions performed by Herlan.

Timberline Four Seasons and Long Run alleged that the circuit court erred in not finding that an agency relationship existed between them and Herlan or her brokerage businesses and in not ordering Herlan to return certain business records and telephone numbers to the resort, as required by West Virginia Code § 30-40-12 (which specifies qualification for a broker's license).

For the purpose of determining whether an agency relationship existed, the Supreme Court relied on Paxton v. Crabtree, 400 S.E.2d 245 (W.Va. 1990), which sets forth four factors to consider: the selection and engagement of the servant; the  payment of compensation; the power of dismissal; and the power of control. The Court found that the first three criteria were easily satisfied, while the fourth, the power of control, required some analysis. 

Even though there had not been a written contract between the resort and Herlan since 1996, the Court found that "[p]roof of an express contract of agency is not essential to the establishment of the relation[,]" and found that it could infer that an agency relationship existed between the parties.

The Court also found that the circuit court's order "failed to analyze and all but ignored several other key facts demonstrating that Timberline Four Seasons actually maintained some level of control over Timberline Resort Realty and Pat Herlan."

For example, the Court focused on the resort's control over the operating checking account and its financial control over Herlan's real estate brokerages. The resort also paid taxes for the real estate operation, employed the individuals who worked for Herlan's real estate brokerage, and maintained control over the brokerage's payroll.

But the Court found that "the most compelling piece of evidence of an existing agency relationship is a business sign that remained hanging on the wall of the Timberline Four Seasons lodge stating, 'Timberline Resort Realty A division of Timberline Four Seasons Resort.'" (Emphasis in original.) Herlan testified that the sign had been present for four or five years and was hanging on the wall during the trial before the circuit court in 2007.

Accordingly, the Court concluded that the real estate division was not independent of, but was a division of, the resort, and that the circuit court abused its discretion in failing to award injunctive relief to the resort.

As for Herlan's retention of business records and telephone numbers, the Court rejected Herlan's argument that she could not return the documents because neither the resort nor anyone on its board of directors had a real estate broker's license. The Court found that Herlan, as the resort's agent, owed it a duty of loyalty, which she breached by taking and retaining the documents.

Likewise, the Court found that Herlan's retention of telephone numbers that were advertised as the resort's contact number (and printed on 400,000 brochures) was also a violation of her duty of loyalty to the resort. The Court reasoned that "the telephone numbers were registered and utilized by Ms. Herlan as a function of her agency and employment with [the resort] ...."

I attribute the decision's narrowness to the Court's fact-specific analysis. But as the opinion makes clear, once the Court concluded that an agency relationship existed, Herlan was going to have a very hard time justifying her actions in taking and retaining the records and telephone numbers.

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It’s not as if former West Virginia University and current University of Michigan head football coach Rich Rodriguez doesn’t have enough to worry about, what with his team’s 3-9 record last year and the pressure on him to return the Wolverines to greatness -- although their 31-7 win yesterday over Western Michigan University helped, and avoided a replay of UM’s loss to Appalachian State University two years ago, albeit when Lloyd Carr was head coach. Then there was the the report by the (Detroit) Free Press this week on the (anonymous) allegations from several UM players that the coaching staff routinely ignores the NCAA’s limits on the amount of time that players can be required to devote to their sport, which have prompted AD Bill Martin to announce that the athletic department's compliance office will investigate the allegations.

But that wasn't the end of Rodriguez's troubles. According to this article by Dave Birkett on AnnArbor.com, Nexity Bank has sued him in federal court in South Carolina for defaulting as a guarantor on a real estate loan. The bank seeks $3.9 million from Rodriguez, although the original promissory note was for $26.1 million. He is one of five guarantors of a condominium development called Legends of Blacksburg. 

Although the article says that Rodriguez and the four other guarantors, Ronald E. West, Floyd D. Elliott, Lamar Greene, and Jeffery Greene, have been sued, this complaint names only Rodriguez as a defendant, and includes the promissory note, the guaranty agreement , and the bank's demand letter as exhibits.

But here's something else that's more interesting. One of the comments (eighth one down) on the article notes that Rodriguez is an investor in two other real estate ventures, Palmetto State Enterprises, LLC, which developed The Spur at Williams-Brice, and Legends of Tuscaloosa, LLC, which developed operates Legends of Tuscaloosa, and that all three are managed by Mike Brown, Rodriguez's agent. The author of the comment links to Brown's deposition transcript in WVU's lawsuit against Rodriguez in which he testified -- starting at page 14 -- about the LLCs, which were organized to develop condominiums.

On Wednesday, Birkett wrote that Lamar Greene, one of Rodriguez's partners in the Legends of Blacksburg project was arrested last year on five felony counts of breach of trust with fraudulent intent and is a banned Clemson University booster. To make matters worse, Greene's felonies allegedly involve the theft of funds from Palmetto State Enterprises, LLC -- another of Rodriguez's ventures -- starting as early as 2005, which predated their involvement together in the Blacksburg project, according to this Associated Press article posted on Greenvilleonline,com. This is the third time Clemson has banned Greene from its athletic program. Rodriguez was offensive coordinator at Clemson from 1999-2000.

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A couple months ago, I wrote about the furor over the bonuses paid to some AIG employees, which resulted in the House of Representatives passing a bill that would tax the bonuses at 90%. Although that crisis passed, it looks like another financial services company got the hint. 

According to several news reports today, Citigroup has told approximately five former executives that they are not going to receive severance payments that Citigroup is contractually obligated to make.

As reported by David Enrich in The Wall Street Journal, Citigroup has cancelled the payments because it doesn’t want to risk a public uproar, and is “wagering that the former executives will conclude that it would be publicly embarrassing for them to file lawsuits against the struggling, taxpayer-backed company seeking the money.” 

I’m not sure that Citigroup is going to win that wager. First of all, Citigroup is deciding on its own, without any pressure or demand from the government, not to make the severance payments. Thus, Citigroup is breaching the agreements of its own volition and can’t claim that the government is coercing or requiring it not to make the payments.

Second, the amounts involved are more than enough incentive for the executives to pursue litigation regardless of whether the attendant publicity embarrasses them. The severance payments total approximately $100 million, of which Citigroup has paid more than half. But that leaves a lot of money to fight over. For example, one executive, Michael Klein, was owed $21.3 million in cash on March 31 and another $7.5 million on October 5, although it isn’t clear whether Citigroup made the March payment to Klein. So, Klein is losing at least $7.5 million due to Citigroup’s decision.

I think at least some of the executives will file suit against Citigroup, assuming that Citigroup does not reconsider its decision and pay them their severance payments.

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In what I regard as a surprising development, at least this soon, Marriott International and coal operator Jim Justice have reached a tentative settlement regarding his purchase of The Greenbrier from CSX, despite Marriott's contract with CSX to purchase the resort.  I wrote about Justice's purchase last week. 

According toa story on page A1 in Saturday's Washington Post, reprinted in yesterday's (Charleston, West Virginia) Daily Mail, a Friday meeting between Justice and Marriott representatives resulted in an agreement whereby they have 30 days to negotiate a marketing deal that compensates Marriott for any business that it generates.  If they can't reach a deal, Justice will pay a $7.5 million break-up fee to Marriott. 

Business Editor George Hohmann's story in today's Daily Mail elaborates on the details of the parties' agreement, such as that the resort will be marketed by both Marriott and Justice not as a Marriott but under its own name, and that Justice will have access to Marriott's national and international reservations systems.

And the Associated Press reports that today, the bankruptcy court in Richmond, Virginia granted The Greenbrier's motion to dismiss its bankruptcy, following Justice's testimony that he has sufficient resources to fund the operation. 

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As an update to my earlier post on the AIG bonuses, Catherine Rampell posted on TNYT's Economix blog a short time ago that the AIG employees' bonuses may still be taxed even if the employees return them, according to the concept of "constructive receipt."  She points out that whether the IRS actually taxes the bonuses depends on if they want to be "sticklers," but that its authority to do so exists.

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The furor over the AIG retention payments (a/k/a bonuses) has died down somewhat, perhaps because most of the executives involved have agreed to refund the bonuses, and perhaps because President Obama was less than enthusiastic in his support for the legislation passed by the House of Representatives that would impose a 90% tax on the bonuses.

But for your information, here are AIG’s 2008 Employee Retention Plan, a confirmation and acknowledgement, and a schedule to the master agreement, which are also located in this press release on the House Committee on Financial Services' website.   My thanks to Bob Ambrogi on Twitter (@bobambrogi) for the link.  Incidentally, Bob discusses the AIG contracts this week on his Lawyer2Lawyer podcast, "AIG Mess: Executive Contracts."

And from earlier this week, here is "Dear AIG, I Quit!", an op-ed in The New York Times by Jake DeSantis, which is the text of his resignation letter to Edward Liddy, AIG’s CEO.  DeSantis, now the former executive vice-president of AIG Financial Products, criticizes Liddy for his testimony last week regarding the bonuses:

But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn’t defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.

DeSantis continues with this, which makes one think that the bonuses haven't been or won't be returned as willingly as media reports have indicated:

As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised.  None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.

Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored.  They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.

 It looks like Mr. Liddy has his work cut out for him.

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There is some irony in the story being reported by the Associated Press’ Lawrence Messina about a lawsuit brought by Progressive Minerals LLC against several officers of Global Empire Investments and Holdings LLC.  Progressive Minerals LLC v. Rashid, Civil Action No. 5:07-CV-108 (N. D. W. Va. August 24, 2007).  But first, a description of what's involved in the case.

Here is the complaint, in which Progressive asserts that it paid a $750,000 “commitment fee” to Global for its assistance in providing $200 million in financing for Progressive’s purchase of a coal mine in southern West Virginia from Justice Energy Company, Inc.

But after Global accepted the fee, it never provided the loan.  And while Progressive was waiting to hear from Global, Progressive learned that Global had filed for Chapter 11 bankruptcy in Texas and listed assets consisting of three bank accounts totaling $3,369.24 and two office buildings assessed at $5.4 million but with secured debt of $12.8 million against them.  In other words, not quite a “global empire.”

Judge Frederick P. Stamp, Jr. recently dismissed two defendants for lack of personal jurisdiction, but denied the motion as to a third.  He also entered a scheduling order that sets a bench trial to begin on October 14, 2009.

The irony in the lawsuit stems from the fact that Progressive’s president is former West Virginia Governor Arch A. Moore, Jr., whose own past suggests that he would recognize a swindle when he sees one.  In 1990, he pled guilty to five felonies resulting from corruption while in office and served three years in prison and on home confinement.

In 1993, the Fourth Circuit affirmed the District Court’s denial of his petition for a writ of habeas corpus based on ineffective assistance of counsel provided by his lawyer, William Hundley.  U.S. v. Moore, 993 F.2d 1541 (4th Cir. 1993).

I always thought that Moore’s ineffective assistance claim was ridiculous, considering that Hundley had been the former chief of the Organized Crime Division of the Department of Justice under Robert F. Kennedy and was a noted criminal defense lawyer in Washington, D.C.   Plus, he had represented Moore on two earlier occasions.

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The Supreme Court of California dealt a significant blow to noncompete agreements with its recent decision in Edwards v. Arthur Andersen LLP, 189 P.3d 285 (Cal. 2008).

Raymond Edwards went to work for Andersen as a tax manager in 1997.  When he was hired, he had to sign a noncompete agreement.  In May 2002, when Andersen imploded as a result of its work for Enron, Andersen decided to sell its tax practice, including Edwards’ group, to HSBC USA, Inc.

In July, HSBC offered to hire Edwards, but first required that he sign a termination of noncompete agreement (TONC), which, among other things, required Edwards to resign from Andersen and release Andersen from any and all claims.

HSBC would not hire Edwards without a signed TONC and Andersen required a signed TONC before it would release him from the noncompete agreement.  Edwards signed HSBC’s offer letter, but not the TONC.  Andersen terminated him and withheld any severance, and HSBC withdrew its employment offer.

Edwards sued Andersen, HSBC, and the HSBC subsidiary created to purchase the tax practice group, and alleged intentional interference with prospective economic advantages and anticompetitive business practices under the Cartwright Act (California's general antitrust law).

He settled with everyone except Andersen, and the trial court ultimately ruled in Andersen’s favor as to all of Edwards’ claims.   The Court of Appeal determined that Andersen's noncompete agreement was invalid under California law and that requiring him to sign the TONC as consideration for being released from the noncompete agreement was an independently wrongful act for purposes of Edwards' claim for intentional interference with prospective economic advantage.  The court also held that the TONC purported to waive Edwards' right to indemnification under California labor law and therefore violated public policy.

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    Max Kennerly at Litigation & Trial wrote earlier this week about a recent decision from the Third Circuit Court of Appeals that held that an arbitration provision in an employment agreement can be enforced even though the agreement was written in English, which the employee did not speak.  Law.com also had this article about the decision.

    In Morales v. Sun Constructors, Inc., 2008 WL 3974059 (3^rd Cir. August 28, 2008), the court was asked to determine “whether an arbitration clause in an employment agreement is enforceable where one party is ignorant of the language in which the agreement is written.”  

    The court concluded that, in the absence of fraud, “the fact that an offeree cannot read, write, speak, or understand the English language is immaterial to whether an English-language agreement the offeree executes is enforceable.”  The 2-1 decision reversed the district court, which had found that mutual assent to the agreement did not exist as a result of the language barrier.

    But the majority opinion written by Judge Michael A. Chagares failed to address that when Sun required Morales and other hourly employees to attend an orientation session conducted in English and to sign the employment agreement, Sun asked another employee, Hodge, who was bilingual and whom Morales knew, to explain what was happening in the orientation and to help Morales understand the agreement.   And Hodge testified that he generally understands about eighty-five percent of what is said and written in English, and that he did not specifically explain the arbitration provision to Morales.

    Basically, once Morales signed the agreement, regardless of what he did or didn’t understand or knew or didn’t know about its provisions, he was bound by the agreement, including its mandatory arbitration clause.

    The dissent written by Judge Julio M. Fuentes identifies the real issue in the case: “The gravamen of this case is that Sun – the other party the Agreement – took upon itself the task of translating the Agreement for Morales and, in doing so, failed to convey the entire contents of the Agreement.  What we must determine is whether this failure resulted in a lack of mutual assent; I believe that it did.”

    I think this paragraph in the dissent summarizes the case:

If the facts of this case were different, I might adopt the majority’s position.  For example, if Sun had simply handed the Agreement to Morales and indicated that it was Morales’ responsibility to find a translator, and Morales had employed an incompetent translator who failed to translate the arbitration clause, I would agree that Morales was bound by the Agreement.  However, when Sun made the decision to insert itself between Morales and the contract, it created a situation where lack of mutual assent could, and did, occur.  Because I do not believe it was negligent or otherwise improper for Morales to rely upon the translation provided by Sun, and because Morales was not informed in the course of that translation that the Agreement contained an arbitration clause, I agree with the District Court that Morales “did not manifest an intention” to be bound by the arbitration clause.

 

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    Various media reports today indicate that West Virginia University has settled its lawsuit against its former head football coach, Rich Rodriguez, for $4 million, the cost of the buyout in his contract. The settlement occurred yesterday at a court-ordered mediation.  Here is Associated Press reporter Vicki Smith’s story about the settlement.

    Also, according to this story in the Detroit Free Press, Rodriguez’s new employer, the University of Michigan, will pay $2.5 million of the amount immediately.  Rodriguez will pay the balance in three payments of $500,000 each, with the first to be paid in 2010.  UM also will pay Rodriguez’s attorney’s fees.

    Yesterday was the deadline set by the Circuit Court of Monongalia County for Rodriguez to disclose whether UM or any other entity had agreed to pay the buyout on his behalf.  Adding to the pressure on Rodriguez was a hearing scheduled today in Michigan on subpoenas that WVU’s lawyers had issued for the depositions of UM President Mary Sue Coleman and UM Athletic Director Bill Martin. 

    In the interest of completeness and for what they’re worth, here are the deposition transcripts of WVU President Mike Garrison, West Virginia Board of Governors members Steve Farmer and Parry Petroplus, WVU Chief of Staff Craig Walker, and WVU Assistant Athletic Director Mike Parsons. 

    Finally, this is unrelated to the parties' settlement, but I have to comment on the Transcript License Agreement present on page 2 of some of the transcripts.  The agreement provides that:

By signing the Transcript Order Form to receive and pay for a copy of this transcript, (and/or video) I agree that [sic] I nor any person, attorney, paralegal or expert witness may make, copy and/or distribute to others or upload to any internet websites or deposition repositories for future sales, monetary gain or any other purpose any copies of this transcript (and/or video) without paying Streski Reporting & Video Service, a division of MDStreski, LLC, the ordinary and customary charges for any and all additional copies viewed on line or downloaded by any third party. 

    I have some questions. First, is this agreement even enforceable?  Who owns a deposition transcript – the reporter who transcribes the deposition and prepares the transcript or the parties who hire the reporter?  And how much are the ordinary and customary charges “for any and all additional copies viewed on line or downloaded by any third party”? 

    I don't see how a court reporter has any ownership interest in a transcript or video that could be enforced by such an agreement.  A transcript isn't a software program that a developer like Microsoft owns and licenses to a user.  But maybe those video depositions posted on YouTube
are making court reporters rethink their traditional role. 

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    Last week, I wrote about the peculiar wording of Mike Garrison’s announcement that he was stepping down as West Virginia University's president, in which he avoided using the word “resign” to describe his departure.  It seemed that there was a reason that he did not affirmatively state that he was resigning, which was reinforced by the statement issued by the WVU Board of Governors (it follows Garrison's statement), which acknowledged his departure from the position without using the word “resign” to describe his action.  (I sent an e-mail to Garrison last Saturday, asking if there was any reason he didn't use the word "resign" in his announcement, but he has not responded.)

    West Virginia Public Radio posted this article on its website on Wednesday, which suggests that Garrison is not resigning from his position as WVU president, even though he may not be in the position after September 1.

    I wrote earlier that because Garrison’s employment agreement is silent regarding any compensation owed to him if he resigns, he is entitled to only his annual compensation and associated benefits though September 1.

    That was accurate, but incomplete, because the period of time that is now relevant is between September 1, 2008 and June 30, 2010, when Garrison's contract with the BOG expires.  And his compensation for that period of time appears to be set by paragraph 16:

Notwithstanding the provisions of paragraph 7 [which makes Garrison responsible to the BOG through its chairman], the Board commits to employ you as its President, or in some other capacity, in a position to be determined by it, at the Presidential salary provided for herein and as increased from time to time by the Board, for a term ending on June 30, 2010, unless (i) you voluntarily resign or retire, or (ii) you are terminated, all as provided for herein.

    So it looks like the careful avoidance of the word “resign” was no accident, and was intended to enable Garrison to continue to receive his salary of at least $255,000 per year, working in some other capacity, until June 30, 2010.

    Corporations and businesses negotiate severance packages and golden parachutes with departing executives as a matter of course.  On Thursday, two executives at Lehman Brothers were removed from their positions, and reassigned elsewhere in the company.

    But the difference between a corporation such as Lehman Brothers and WVU, among many others, is that a corporation is answerable in such matters only to its shareholders, while a public educational institution does not have such a limited constituency.  If the speculation about Garrison's future is correct, and we may not know for sure until much closer to September 1, there will be significant opposition to his continued employment by the BOG.

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    Mike Garrison's "resignation" today as president of West Virginia University
presents a timely opportunity to review his employment agreement, including its provisions for severance pay.  I put resignation in quotation marks not to be sarcastic, but because Garrison's announcement about his departure was vague.  Here is Garrison's  statement, in which he says that he will stay in office until September (presumably September 1), but for whatever reason, does not affirmatively state he is resigning.

    There was some question whether September was chosen in order to entitle Garrison to additional or supplemental compensation if he stayed in office at least one year (he took office on September 1, 2007, which was moved up from his original start date of September 21).  Here is the May 10, 2007 letter from the West Virginia University Board of Governors to Garrison, which serves as his employment agreement. 

    The agreement, which describes Garrison's service as "at the will and pleasure of the Board," requires him, in the event of his resignation, to give "at least sixty days notice before [his] last day in the office."  Garrison's term as president under the agreement was scheduled to end on June 30, 2010.

    This recent article in the Daily Mail reported that Garrison would receive his yearly salary of $255,000 if he was discharged without cause by the Board of Governors prior to June 30, 2008.  If he was discharged without cause after June 30, 2008 but before June 30, 2010, he would be entitled to six months' salary.  A termination for cause, as defined in the employment agreement, would not entitle Garrison to any further compensation. 

    Because the employment agreement is silent regarding any compensation owed to Garrison if he resigns, he is entitled to only his annual compensation and associated benefits through the remainder of his time as president.

    I think Garrison's decision not to state that he is resigning  has some significance, but I cannot see how he is entitled to continued compensation as WVU's president after he voluntarily leaves the position, regardless of how he describes his departure. 

   

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