The Investors’ Control of Their Investment Advisers. Who Has the Final Word?

TAMAR FRANKEL

BU Law emerita professor Tamar Frankel discusses an emerging issue affecting financial advisers—when a client may exercise control over the actions of the adviser. Frankel relates the story of an investment adviser that did not follow the client’s orders to cease certain investments, at a cost of almost $5 million to the client. As Frankel explains, the Securities and Exchange Commission (SEC) got involved, resulting in the investment adviser’s settlement for a significant payment to the client and other conditions.

Read More

Paczkowski v. Garven

Docket: 19-6029

Opinion Date: February 13, 2020

Judge: Nail

Areas of Law: Bankruptcy

The Garvens contracted with Debtor and DRMP for home repairs and improvements. Unhappy with the results, the Garvens sued Debtor and DRMP in state court and obtained a default judgment against them. At the Garvens' request, the sheriff levied a writ of execution on Debtor's ownership interest in DRMP and scheduled an execution sale. At the execution sale, the Garvens purchased Debtor's ownership interest and became the sole owners of DRMP. Upon learning of the execution sale, Debtor allegedly began withdrawing assets from DRMP and transferring them to a different entity. Debtor then filed a chapter 7 bankruptcy petition. The bankruptcy court lifted the automatic stay to allow the Garvens and DRMP to commence a state court action against Debtor and related third parties to avoid the allegedly fraudulent transfers. The Eighth Circuit Bankruptcy Appellate Panel dismissed an appeal. The Garvens and DRMP filed their motion for relief from the automatic stay on June 5, 2019. The bankruptcy court rendered its final decision on September 19, 2019, more than 60 days after the motion was filed. The 60-day period was not extended, so the automatic stay was terminated by operation of law on August 5, 2019, rendering the order lifting the stay superfluous.

Dolgencorp, LLC v. National Labor Relations Board

Dockets: 18-3695, 19-1157

Opinion Date: February 13, 2020

Judge: Grasz

Areas of Law: Labor & Employment Law

Dolgencorp's Auxvasse, Missouri store employed six people. Price, a sales associate, contacted the Union. Myers, an organizing director, obtained authorization cards and filed an election petition. The Union and Dolgencorp agreed to the terms of an election to be held on December 8, 2017. On November 17, 2017, Myers created a group text message conversation between himself, Price, and employees Miles and Durlin. Through the election date, Miles and Durlin actively participated in group conversations and never expressed opposition to Union representation. The six eligible employees voted, 4-2, to unionize. After the election, Miles and Durlin told Dolgencorp’s vice president they voted in favor of the Union but that Price and Myers pressured them using threats and bribes. Dolgencorp filed objections, alleging Price acted as an agent of the Union and engaged in misconduct that materially affected the election result. The NLRB certified the Union as the exclusive representative. Dolgencorp refused to recognize the Union. The Eighth Circuit upheld the Board’s finding that Dolgencorp engaged in an unfair labor practice (National Labor Relations Act, 29 U.S.C. 158(a)(1), (5)). Conclusions that Price's comments were not meant to be intimidating or to influence witness testimony and that Price was not acting as a union agent or with apparent authority were supported by substantial evidence. An alleged tire-slashing threat occurred outside the critical period; the offer of an unconditional $100 loan did not substantially impair an employee's free choice in the election.

Paskert v. Burns

Docket: 18-3623

Opinion Date: February 13, 2020

Judge: Grasz

Areas of Law: Labor & Employment Law

Paskert, an Auto$mart sales associate, was supervised by Burns. Bjorkland was also a sales associate. Paskert alleges she was prevented from completing her training. Burns frequently lost his temper with everyone, he ridiculed and screamed at his employees, he referred to female customers using derogatory names, and threw objects. Bjorkland and Paskert heard Burns remark that he “never should have hired a woman” and wonder whether he could make Paskert cry. Burns openly bragged at work about his purported sexual conquests. Bjorkland witnessed Burns attempt to rub Paskert’s shoulders. Burns stated, “Oh, if you weren’t married ... I could have you.” Paskert and Bjorkland reported these incidents to the Director. After a few months on the job, Paskert was demoted. Three days later, she was discharged for insubordination, a poor sales record and use of profanity. The Iowa Civil Rights Commission issued a right-to-sue letter. Paskert’s federal complaint cited sex discrimination based on a hostile work environment and retaliation. The district court granted the defendants summary judgment. The Eighth Circuit affirmed. Burns’s alleged behavior, while reprehensible and improper, was not so severe or pervasive as to alter the terms and conditions of Paskert’s employment. Paskert failed to exhaust her retaliation claim. Because hostile work environment claims are separate from sex discrimination claims, and because Paskert failed to make any separate arguments regarding sex discrimination in her briefs, the claim was not before the court.