King & Spalding Can’t Nix Lawyer’s Termination Suit Over ZTE Case

Photographer: Giulia Marchi/Bloomberg

King & Spalding must defend before jury claims that it retaliated against associate

Associate raised ethical concerns in handling of ZTE case


King & Spalding LLP must defend claims that it retaliated against a senior associate who was demoted and fired for allegedly raising concerns that two partners may had violated ethical rules in their representation of Chinese telecommunications firm ZTE Corp.There are questions of fact regarding whether the former associate reported or attempted to report ethical concerns and whether King & Spalding retaliated against him in violation of New York common law and federal benefits law, Judge Valerie Caproni of the U.S. District Court for the Southern District of New York held June 8.

The decision is a setback for international firm King & Spalding, which must defend before a jury trial claims of breach of contract and wrongful discharge under the Employee Retirement Income Security Act. Former associate David A. Joffe last year sued the firm alleging he was retaliated against for his expressions of ethical reservations regarding the conduct of the two partners who represented ZTE in a 2014 case. In that case, Viringo Inc. accused the Chinese firm of disclosing confidential information.

Almost immediately after the ZTE case was settled, Joffe was removed from the partnership track, his pay was temporarily frozen, and he didn’t receive any bonus for 2015, according to court documents. Concerned that he was being penalized for his involvement in the ZTE case, he sent an email to another partner to raise the issue.

Caproni refused to dismiss Joffe’s breach-of-contract claim under Wieder v. Skala, which is premised on his alleged retaliatory discharge. She rejected King & Spalding’s argument that the cause of action is “extremely narrow” and applies only to law firm associates who are faced with “plainly” unethical conduct. An associate doesn’t need to prove an actual underlying ethical violation or that he was, in fact, under an obligation to report unethical conduct to be able to file a sufficient claim of breach of contract under Wieder, Caproni said.

Caproni held that Joffe sufficiently showed that the firm’s alleged legitimate reasons to discharge him—including his failure to turn in a practice plan, enter his time sheets on schedule, and not meeting his billable-hour goals for 2015—were pretextual, Caproni said. It may be that King & Spalding demoted and fired Joffe for unrelated, legitimate reasons, but there is adequate evidence that the justifications proferred by the firm are pretextual for the case to go to a jury, she said.

Caproni also allowed to advance to trial Joffe’s claim that King & Spalding violated the Employee Retirement Income Security Act by terminating him to evade a $20,000 contribution to his 401(k) account. Joffe was allegedly terminated two weeks before the contribution was due to vest, according to court documents.

A jury trial will be scheduled after August 2018.

Javerbaum Wurgaft Hicks Kahn Wilkstrom & Sinins P.C. represents the former associate. Proskauer Rose LLP represents King & Spalding.

The case is Joffe v. King & Spalding LLP, 2018 BL 204273, S.D.N.Y., No. 1:17-cv-03392-VEC, order denying defendant’s motion for summary judgment6/8/18.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.comMartha Mueller Neff at mmuellerneff@bloomberglaw.com