August 15, 2011

Fired & defamed: MN CEO wins $4 million award

Posted in Breach of Contract, Contracts, Defamation, Libel, Slander, Termination for Cause, Wrongful Termination tagged , , at 11:12 pm by Tom Jacobson

Firing its CEO and claiming it was for cause when it really was not proved to be a costly mistake for Minnesota-based Advanced BioEnergy, LLC.  According to a report in Minnesota Lawyer, ABE’s founder and former CEO, Revis Stephenson III, recently won a $4 million arbitration award after the company falsely claimed he was terminated for cause.

Stephenson’s contract with ABE provided that if he was fired without cause, he would be paid a severance worth approximately $800,000.00, but if he was fired for cause, he would be paid nothing.  The agreement also defined “cause.” ABE fired Stephenson and said it was for cause,  and Stephenson challenged the company’s decision.  The case went to arbitration, and the arbitrator found that the company did not have cause to terminate Stephenson but had only called it that to save money.  Moreover, the arbitrator concluded that ABE defamed Stephenson by falsely claiming it had cause for firing him.  The arbitrator awarded Stephenson $1 million for defamation, and the parties later agreed to a $4 million settlement for all claims.

As the arbitrator in this case noted, a false “for cause” label can hurt an employee’s job prospects.  Therefore, employers who want to dismiss an employee for cause need to make sure that’s the true reason because a false “for cause” characterization could lead to a claim for defamation.

For more information about this case, see CEO receives $4M award for defamation, Minnesota Lawyer, Aug. 5, 2011, or contact me at taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2011 Swenson Lervick Syverson Trosvig Jacobson, PA

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