“Will no one rid me of this turbulent priest!” lamented King Henry II, which to his purported surprise led four knights to murder Thomas Becket, the Archbishop of Canterbury. To the knights, the King’s wishes were clear. But the wording of his statement and its ambiguity allowed King Henry to deny that he authorized, or even knew of, the barbarity committed on his behalf. Following the financial crisis of 2008, the financial industry has arguably experienced a number of such “King Henry moments,” where senior executives have allegedly been aware of, or turned a blind eye to, questionable actions that occurred on their watch.
Headlines abound with recent examples of senior executives channeling their inner King Henry and tacitly allowing, if not silently encouraging, their employees to undertake improper and systematically harmful actions—often for the executives’ own personal benefit. For example, supervisors at JPMorgan Chase encouraged employees to push sub-standard, toxic mortgages, which were among the precipitating causes of the 2008 financial crisis, in order to increase the supervisors’ own bonus pool. At the same time, they prohibited diligence managers from using emails and took other steps to obscure their own involvement in the improper scheme. However, no senior executives were held accountable for these actions or the damages to which they contributed. Senior executives at MF Global claimed ignorance when, in direct response to their oblique request to their employees for funding, hundreds of millions of dollars of customer assets were used to support the firm’s proprietary transactions, resulting in the eighth largest bankruptcy in history. No senior executives were held accountable for these actions or the resulting customer losses. Executives of Barclays Plc looked the other way when its traders manipulated Libor in order to increase the bank’s profits, despite the significant negative impact on worldwide financial markets. No senior executives were held personally accountable for these actions or the resulting market impact. Senior executives at Standard Chartered Bank and ING Bank N.V. processed (and collected fees on) transactions for internationally sanctioned countries, thereby contributing to money laundering and terrorism financing. Again, no senior executives were held accountable for their actions or the resulting societal harm.
These events have properly led to calls to reform existing legal structures so that liability would be imposed on senior executives for similar future incidents. Although recent headlines highlight the need for reform, it is important to recognize that the improper behavior generating these headlines represents a very small fraction of overall financial industry behavior. Reforms should balance the need to dis-incentivize excessive risk-taking and other behavior with the need to preserve and promote healthy, active, and well-functioning financial markets. With this purpose in mind, this Article outlines the current state of the law governing senior executive liability, summarizes recent headline events in the financial industry, and provides a series of recommendations for proportionate reforms to correct current incentive imbalances.
Understanding the limitations of the current legal framework governing executive liability is essential to appreciating recent populist calls for reform. The framework is geared toward insulating executives from shareholder lawsuits that question legitimate business decisions. It is neither intended nor equipped to address incidents of fraud and failures of senior management to properly supervise subordinates.
Generally, the individual executive who authorizes a corporate action is shielded from personal liability—even when that action has negative consequences for the corporation and its shareholders. For example, when a shareholder alleges that a board of directors’ decision constitutes a breach of fiduciary duty, courts generally defer to the decision-making ability of the directors—rather than second-guess their decision—under the doctrine known as the business judgment rule. This deference holds unless the shareholder can establish a lack of careful board deliberation, self-dealing, or bad faith. The business judgment rule reflects the idea that directors are motivated to act in the best interests of the corporation and its shareholders. It allows corporate executives to fulfill their duty to make a corporation profitable without fear that an informed but ultimately costly decision will result in exposure to liability.
Under this legal framework, an individual executive often will only be prosecuted for financial or other white-collar crime (or be found civilly liable on related theories) if it can be demonstrated that he had actual knowledge of the actions that harmed his corporation or clients, or willfully blinded himself to such knowledge. Because of this high bar to individual prosecution, regulatory enforcement actions typically focus on corporate entities. Although these efforts sometimes produce large monetary settlements, they illustrate the shortcomings of the current legal framework that make it difficult to hold individual executives culpable for improper management or supervision.
In addition to inhibiting the prosecution of individuals, the current legal framework tends to misalign the interests of executives, shareholders, and the public, because it discourages internal investigation and reporting of wrongdoing while simultaneously incentivizing risk-taking by the financial institutions’ employees. For example, an executive in an oversight role who investigates and uncovers wrongdoing but fails to act may expose himself to liability. That same executive, however, might avoid personal exposure if he simply fails to investigate, or distances himself from the wrongdoing—despite the fact that this “see no evil” posture may cause substantial damage to his corporation. This problem is magnified when the improper or reckless behavior may produce a bonus of millions of dollars if the bet, made with shareholder funds, wins.
Recent headlines highlighting allegedly improper actions of individuals at major financial institutions illustrate the problems that stem from the limitations of the current legal framework and associated incentives that prioritize profit-seeking and risk-taking by individuals.
A prime example of the problems that can emerge is the $13 billion settlement between JPMorgan and the Department of Justice (DOJ), which freed JPMorgan from any civil liability associated with the bank’s alleged fraudulent mortgage operations that may have played a role in the 2008 financial crisis. The settlement agreement is the result of federal and state claims against the bank for issuing residential mortgage-backed securities that JPMorgan represented as being in compliance with underwriting guidelines. The employees are alleged to have known of the misrepresentations, but pushed them through anyway in order to increase compensation awards.
The incentive of senior managers to seek immediate profits at the potential expense of their firm’s long-term health is also illustrated by the recent settlement between Standard Chartered Bank and the DOJ. U.S. federal and state prosecutors investigated Standard Chartered for processing thousands of allegedly illegal transactions through the U.S. financial system on behalf of sanctioned entities (Iran, Sudan, and others), which allegedly made Standard Chartered millions in transaction fees. Emails from the investigation revealed that the senior managers were warned that the transactions could result in “very serious or even catastrophic reputational damage to the bank,” but continued to process and collect fees on the questioned transactions. This was not Standard Chartered’s first settlement related to the same illegal schemes, as the bank had previously settled similar charges with state regulators. Regulators have also investigated and reached settlements with other banks whose senior management actively pursued and concealed similarly improper but profitable transactions with sanctioned entities.
The reports of the manipulation of ISDAfix exemplify how limitations on imposing liability on individuals can also pose a systemic risk to the financial markets. The lawsuit against these banks alleges that the defendants rigged the ISDAfix, a benchmark used to set rates for interest rate derivatives, and thereby were in a position to profit in separate derivatives trades with clients that sought to hedge against moves in the interest rates. In order to see such financial gain, the ISDAfix only needed to be “manipulated by as little as . . . 0.0025 percent” of a point of the overall rate for the banks to potentially earn millions. On May 20, 2015, the Commodity Futures Trading Commission (CFTC) settled charges against Barclays Plc for $115 million as a penalty for the attempted manipulation of the ISDAfix. Though the settlement required Barclays to take remedial steps that would help “detect and deter trading intended to manipulate swap rates and improve internal controls,” no individuals were held personally liable.
The 2008 financial crisis as a whole serves as an illustration of the potential systemic risk created by the current legal framework. The Financial Crisis Inquiry Report found that the 2008 financial crisis was avoidable, but that “the captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand, and manage evolving risks.” The Report recognizes this misalignment, explaining that the compensation systems at “important financial institutions” rewarded the “quick deal” without considering future consequences, and “encouraged the big bet” that would yield a huge upside to compensation with limited downside. The Report showed egregious examples of individuals putting their compensation at the forefront while taking risks with others’ money.
These recent headlines, combined with the ongoing examination of the events that led to the 2008 financial crisis, have contributed to increasingly vocal calls to reform the legal framework for individual liability. Serving as the trustee for the Securities Investor Protection Act liquidation of MF Global, Inc., the Author witnessed the damage inflicted on innocent parties when senior management advances a policy of excessive risk-taking while simultaneously failing to properly supervise the risk-takers. These experiences may be helpful as a guide on how potential reforms to the existing legal framework could realign incentives and better permit regulators and other entities to hold senior managers responsible for fraudulent and otherwise improper actions. The following sections provide an overview of four specific proposals, which, if adopted, would advance these goals.
Following a liquidity crisis that precipitated a “run on the bank” scenario, MF Global filed for bankruptcy on October 31, 2011. A thorough and detailed investigation showed that MF Global’s collapse, and the resulting shortfall in segregated customer assets, was caused by the failure of MF Global’s senior management (i) to install sufficient monitoring and internal compliance systems, (ii) to maintain integrated systems for tracking liquidity and the movement of funds, (iii) to properly supervise key treasury functions, (iv) to avoid the fragmentation of responsibility, and (v) to pay adequate attention to the details of maintaining the segregation of customer funds. These failures occurred at senior levels of the company and led to the improper use of customer property, which was an attempt to shore up liquidity drains caused by an overly risky investment strategy. This tactic was calculated to increase profits and grow MF Global.
The first lesson to be learned from the collapse of MF Global, as well as the other events detailed above, is that there must be stronger incentives for senior management to actively monitor and supervise their employees. This can be accomplished in part by imposing greater requirements on senior executives to ensure the accuracy of their internal monitoring and reporting. For example, CFTC regulations require futures commission merchants (FCMs) to segregate customer funds at all times. Accordingly, it would be an appropriate reform to impose civil fines on the executives responsible for signing the firm’s financial statements in the event of a regulatory shortfall, such as the failure to segregate customer funds as seen in MF Global. In addition, the chief executive officer, the chief financial officer, the chief compliance officer, and the general counsel of an FCM should be required to certify on a frequent and continuing basis not only the company’s financial statements, but also their compliance with customer segregation requirements. It is also necessary to impose certain internal compliance measures, such as requiring these executives to establish and oversee the company’s internal controls and procedures, and to further certify that they have done so. Upon a shortfall in customer funds, Congress should make these individuals personally and civilly liable for their certifications. Similar certification requirements are imposed by the Sarbanes-Oxley Act. In these circumstances, executives should be held strictly liable without a proof of intent requirement, and without the defense that they delegated these essential duties and responsibilities.
Similar calls for reform for executive personal liability have been heard in the United Kingdom. These calls led to reform proposals by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), which included provisions aimed at increasing the individual accountability of senior managers in the United Kingdom. The new regulatory framework introduces the concept of a “senior management function,” and any individual performing such a function must obtain pre-approval by the relevant regulator. The reforms also require that each application for approval to perform a senior management function is accompanied by a “statement of responsibilities” document which sets out the senior manager’s roles and responsibilities along with a “responsibilities map” that describes the firm’s overall governance framework. Additionally, the new regime imposes criminal liability on senior managers making a decision (where that decision falls far below what could reasonably be expected of a person in their position) that causes a firm to fail.
The proposed reforms initially included a “presumption of responsibility” whereby senior managers would be deemed guilty of misconduct unless they could show that they had taken all reasonable steps to prevent a particular contravention from occurring. However, following a backlash from the financial sector, the U.K. regulators revised the proposals such that regulators must now prove that a senior manager did not take all reasonable preventative steps.
The purpose of the U.K. reforms is to encourage senior executives to take greater responsibility for their actions, which, in turn, should make it easier for both firms and regulators to hold them accountable. Although there has been a retreat from the original, more draconian proposals, the U.K. regulators are able to look to senior managers’ statements of responsibilities to determine the areas for which they are responsible. The threat of criminal liability should act as an ultimate deterrent to overly risky behavior and decision-making by senior executives.
Imposing liability on senior executives, in circumstances where relevant certifications turn out to be incorrect, addresses the failures that led to the collapse of MF Global and other recent financial improprieties. However, such action does not address the more general failure to monitor and report improper activities that allowed, for example, the rate manipulation events at the Standard Chartered Bank and ING Bank, among others. To address these situations, individual executives should be obligated to pay a portion of any regulatory fine issued against the organization they manage in incidents of fraudulent actions. As noted above, under the current framework, penalties issued by regulatory agencies are paid directly by the relevant corporation, a cost that is borne by innocent shareholders but not the managers who failed to prevent the fraudulent action. This provides little incentive for executives to change their behavior or prevent fraudulent activities. This proposal is supported by Professors Claire Hill and Richard Painter who have suggested changing this incentive by making highly compensated bank officers personally liable for a portion of the SEC fines. In an effort to align the competing interests, Hill and Painter propose to make the personal liability proportionate to the officers’ compensation. Interestingly, this reform would represent a return to when investment banks were established as partnerships, and partners were liable for the institution’s obligations.
The two preceding proposed reforms are prospective only, and intended to incentivize senior management of financial institutions to more actively manage and supervise their employees. However, they fail to sufficiently address the practical legal difficulties in bringing effective enforcement actions against responsible individuals after the fact. To deal with these concerns, former attorney general Eric Holder outlined potential reforms to the current framework aimed at (i) reducing the difficulty of proving the requisite intent in lawsuits against individual executives and (ii) incentivizing reporting of wrongdoing in the first instance. First, Holder suggests considering revisions to relevant financial fraud statutes that would extend the “responsible corporate officer” doctrine, also known as Park liability, to the financial services industry. This doctrine states that an individual can be prosecuted absent any culpable intent or knowledge of wrongdoing, so long as he or she was in a position to have prevented the wrongdoing and failed to do so. Application of the responsible corporate officer doctrine to the financial industry would limit the protections of the business judgment rule and eliminate problems associated with proving the requisite intent. Second, Holder proposes increasing whistleblower incentives aimed at motivating more individuals to report financial wrongdoing and provide information to aid prosecutions against responsible individuals. Holder explains that the whistleblower provision of the “little-used” Financial Institutions Reform, Recovery, and Enforcement Act, which caps any award at $1.6 million, is insufficient considering that the median executive pay in the relevant industry was $15 million and the collective bonus pool was greater than $26 billion in 2013.
In light of the actions of senior management in the headline making events described above, ranging from systematic failure to monitor to active discouragement of communications, one would expect that showing willful blindness or a conscious disregard would not be an insurmountable hurdle. However, it is important that any reform strike a balance between permitting legitimate risk-taking and providing for punishment of improper actions. As such, calls for the full implementation of the Park doctrine should be tabled until a more complete use of the current array of prosecutorial tools proves lacking.
Historically, the DOJ has given “cooperation credit” to banks and corporations that cooperate with DOJ investigations and provide information regarding wrongdoing. In gauging cooperation, prosecutors were previously able to consider the corporation’s willingness to provide material information about the relevant actors as a mitigating factor. Now, new DOJ guidelines have made cooperation with the DOJ the threshold for allowing any cooperation credit. On September 9, 2015, Deputy Attorney General Sally Quillian Yates sent a memo to all U.S. Attorneys and Assistant Attorney Generals setting forth new guidelines to strengthen the pursuit of individual corporate wrongdoing. The Memo explains that “in order to qualify for any cooperation credit, corporations must provide to the Department all relevant facts relating to the individuals responsible for the misconduct.” In addition, the guidelines state that the DOJ “will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation.” These guidelines shift the focus to the individuals responsible for the wrongdoing and should assist in more thorough investigations by the DOJ, thereby deterring such behavior from the start. The success of these guidelines, however, will of course depend on how they are implemented and to what extent corporations comply.
The proposals contained herein, if adopted, would significantly ameliorate the “King Henry” problem and incentivize senior management to adopt a more active role in rooting out and resolving any improper actions before they metastasize into larger scandals. These proposals will also preserve the appropriate level of risk-taking behavior necessary for healthy financial markets. It is the Author’s position that this can be accomplished by creating more stringent requirements for executives to certify financial statements, holding individuals personally liable for regulatory fines imposed on their respective corporations, and extending Park liability to the financial sector. The DOJ’s amended guidelines for cooperation credit also may help to ensure individuals are held accountable to deter corrupt practices in the first place. Whatever proposals are adopted, now is the time to focus and evaluate this area of the law.
† James W. Giddens is a partner at Hughes Hubbard & Reed LLP and serves as the chair of the firm’s Corporate Reorganization and Bankruptcy Group. Mr. Giddens has also served as trustee on several of the largest and most complex financial liquidations in history, including the liquidations of Lehman Brothers Inc. and MF Global Inc. The views expressed in this Article are those of Mr. Giddens and do not necessarily represent the views of, and should not be attributed to, Hughes Hubbard & Reed LLP. Mr. Giddens thanks Dustin P. Smith and Lauren A. Lipari for their help in the preparation of this article.
 Ben Johnson, Thomas Becket, Historic UK: The History and Heritage Accommodation Guide, http://www.historic-uk.com/HistoryUK/HistoryofEngland/Thomas-Becket/.
 See, e.g., Gretchen Morgenson, Behind Insurer’s Crisis, Blind Eye to a Web of Risk, N.Y. Times (Sept. 27, 2008), http://www.nytimes.com/2008/09/28/business/28melt.html?pagewanted=all (explaining that “[i]n the case of A.I.G., the virus . . . flourished in a climate of opulent pay, lax oversight and blind faith in financial risk models” and contributed to the vulnerable financial system that caused the financial crisis); see also All In With Chris Hayes (MSNBC television broadcast Nov. 10, 2014), available at http://www.nbcnews.com/id/56403976/ns/msnbc-all_in_with_chris_hayes/t/all-chris-hayes-monday-november-th/ (discussing bank executives’ improper practices with Alayne Fleischman and Matt Taibbi).
 For example, a whistleblower at JPMorgan explained that at the bank, supervisors acted to distance themselves from actions that could lead to accountability, in part because individual compensation was tied to the quantity of mortgages the bank purchased, without regard to the quality of those mortgages. See All In With Chris Hayes, supra note 2.
 See Sarah N. Lynch & Aruna Viswantatha, Mf Global Execs Ignorance, Silence Stymie Congress, Reuters, Mar. 28, 2012, http://www.reuters.com/article/us-mfglobal-idUSBRE82R0YI20120329; see also Alex Howe, The 11 Largest Bankruptcies in American History, Business Insider (Nov. 29, 2011, 12:33 PM), http://www.businessinsider.com/largest-bankruptcies-in-american-history-2011-11; Lisa Du, Report: Jon Corzine Ordered $200 million of MF Global Customer Funds to be Moved Before Bankruptcy, Business Insider (Mar. 23, 2012, 4:20 PM), http://www.businessinsider.com/report-jon-corzine-ordered-200-million-of-mf-global-customer-funds-to-be-moved-before-bankruptcy-2012-3.
 See H.R. Rep. No. 113–469, at 5 (2014) (“After MF Global filed for bankruptcy, it was revealed that in the final days before the firm’s failure, customer segregated funds . . . were used to fund the company’s liquidity needs . . . .”); see also Mark Gongloff, Here’s Why There Will Be No Criminal Charges In the MF Global Case, Huffington Post (June 28, 2013, 1:35 PM), http://www.huffingtonpost.com/2013/06/28/criminal-charges-mf-global_n_3516652.html.
 Jonathan Stempel, Barclays Settles With U.S. Investors Over Libor Manipulation, Reuters, Nov. 25, 2015, http://www.reuters.com/article/2015/11/25/barclays-libor-settlement-idUSL1N13K1MA20151125#E1SWEfgMBP5u1GhJ.97.
 Alexandra Alper & Kirstin Ridley, Barclays paying $453 million to settle Libor probe, Reuters, June 27, 2012, http://www.reuters.com/article/us-barclays-libor-idUSBRE85Q0J720120627 (discussing the involvement of Barclays and other banks in Libor manipulation and noting that “no criminal charges have been filed”).
 See Press Release, U.S. Dep’t of Justice, Standard Chartered Bank Agrees to Forfeit $227 Million for Illegal Transactions with Iran, Sudan, Libya, and Burma (Dec. 10, 2012), http://www.justice.gov/opa/pr/standard-chartered-bank-agrees-forfeit-227-million-illegal-transactions-iran-sudan-libya-and (“[F]rom 2001 through 2007, SCB violated U.S. and New York state laws by moving millions of dollars illegally through the U.S. financial system on behalf of Iranian, Sudanese, Libyan and Burmese entities subject to U.S. economic sanctions.”); Press Release, U.S. Dep’t of Justice, ING Bank N.V. Agrees to Forfeit $619 Million for Illegal Transactions with Cuban and Iranian Entities (June 12, 2012), http://www.justice.gov/opa/pr/ing-bank-nv-agrees-forfeit-619-million-illegal-transactions-cuban-and-iranian-entities-0 (explaining that “ING Bank knowingly and willfully engaged in . . . criminal conduct, which caused unaffiliated U.S. financial institutions to process transactions that otherwise should have been rejected, blocked, or stopped . . . .”).
 See Brett Wolf, Bankers to Be held Personally Responsible for Sanctions Violations” Treasury, Reuters, Mar. 22, 2013, http://www.huffingtonpost.com/2013/03/22/bank-sanction-violations_n_2934839.html (“Since 2005, OFAC and its U.S. law enforcement partners have targeted HSBC, Standard Chartered Bank, ING Bank NV, Credit Suisse, Barclays, Lloyds TSB Bank and ABN AMRO for sanctions violations. Still, no individual bankers were held to account.”).
 See, e.g., Editorial Board, The Case of the Missing White-Collar Criminal, Bloomberg View (June 22, 2014 6:02 PM), http://www.bloombergview.com/articles/2014-06-22/the-case-of-the-missing-white-collar-criminal (“The evidence strongly suggests that prosecutors could have done more to identify and punish the people who caused a crisis that has visited suffering on millions.”); see also Gretchen Morgenson & Louise Story, In Financial Crisis, No Prosecutions of Top Figures, N.Y. Times (Apr. 14, 2011), http://www.nytimes.com/2011/04/14/business/14prosecute.html?_r=0.
 See, e.g., Michael S. Barr, The Financial Crisis and the Path of Reform, 29 Yale J. on Reg. 91, 92–108 (2012) (explaining that the “[financial] crisis demonstrated the need for comprehensive financial reform” and identifying areas for reform beyond the Dodd-Frank Act); Eric C. Chaffe, A Panoramic View of the Financial Crisis that Began in 2008: The Need for Domestic and International Regulatory Reform, 35 U. Dayton L. Rev. 1, 2 (2009) (discussing “the importance of reform in international securities regulation as a means of preventing or lessening any future financial crisis”).
 See, e.g., Henry Engler, Global finance leaders to banks: reform culture and conduct or face more regulation, Reuters: Financial Regulatory Forum (Aug. 3, 2015), http://blogs.reuters.com/financial-regulatory-forum/2015/08/03/global-finance-leaders-to-banks-reform-culture-and-conduct-or-face-more-regulation/.
 The business judgment rule amounts to “a presumption that ‘in making a business decision the directors of a corporation acted on an informed basis . . . and in the honest belief that the action taken was in the best interests of the company [and its shareholders].’” In re Walt Disney Co. Derivative Litig., 907 A.2d 693, 747 (Del. Ch. 2005) (quoting Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984)), aff’d, 906 A.2d 27 (Del. 2006); see also In re Caremark Int’l, 698 A.2d 959, 967 (Del. Ch. 1996) (“[W]hether a judge or jury considering the matter after the fact, believes a decision substantively wrong, or degrees of wrong extending through ‘stupid’ to ‘egregious’ or ‘irrational,’ provides no ground for director liability, so long as the court determines that the process employed was either rational or employed in a good faith effort to advance corporate interests.”).
 In re Walt Disney Co., 907 A.2d at 747 (explaining that, under the business judgment rule, the court presumes that a director of a corporation made a decision on an informed basis, and that the presumption can be rebutted by a showing that the board violated its fiduciary duties).
 Ryan v. Gifford, 918 A.2d 341, 357 (Ch. Del. 2007) (finding that a complaint, which alleged breach of duty of loyalty by directors who approved or accepted backdated stock options, stated a claim sufficient to rebut the business judgment rule); In re Walt Disney Co. Derivative Litig., 906 A.2d 27, 67 (Del. 2006) (explaining that the business judgment rule would not apply “where the fiduciary intentionally acts with a purpose other than that of advancing the best interests of the corporation, where the fiduciary acts with the intent to violate applicable positive law, or where the fiduciary intentionally fails to act in the face of a known duty to act, demonstrating a conscious disregard for his duties”) (internal citation omitted).
 In re Caremark Int’l, 698 A.2d at 967–68 n.16 (“The corporate form gets its utility in large part from its ability to allow diversified investors to accept greater investment risk. If those in charge of the corporation are to be adjudged personally liable for losses . . . such persons will have a strong incentive at the margin to authorize less risky investment projects.”).
 In re Walt Disney Co., 906 A.2d, at 67 (agreeing with the lower court’s post-trial opinion in its explanation of actions that constitute a failure to act in good faith).
 For example, Bank of America agreed to a $16.65 billion settlement with the DOJ to resolve claims against the bank for financial fraud. See Press Release, U.S. Dep’t of Justice, Bank of America to Pay $16.65 Billion in Historic Justice Department Settlement for Financial Fraud Leading up to and During the Financial Crisis (Aug. 21, 2014), http://www.justice.gov/opa/pr/bank-america-pay-1665-billion-historic-justice-department-settlement-financial-fraud-leading.
 The DOJ, however, has not hesitated to require banks to plead guilty to criminal charges. In May 2014, Credit Suisse pleaded guilty to conspiracy for aiding its customers in hiding accounts overseas to avoid taxes. Also, BNP Paribas entered a guilty plea to a charge of conspiracy to violate economic sanctions in June 2014. See Peter J. Henning, The Prospects for Pursuing Corporate Executives, N.Y. Times (Sept. 14, 2015), http://www.nytimes.com/2015/09/15/business/dealbook/theprospects-for-pursuing-corporate-executives.html?_r=0.
 See Press Release, U.S. Dep’t of Justice, Federal and State Partners Secure Record $13 Billion Global Settlement with JPMorgan for Misleading Investors About Securities Containing Toxic Mortgages (Nov. 19, 2013), http://www.justice.gov/opa/pr/justice-department-federal-and-state-partners-secure-record-13-billion-global-settlement. As part of its settlement with the DOJ, JPMorgan acknowledged that it made serious misrepresentations to the public and to investors about numerous residential mortgage-backed securities transactions.
 See id. (noting that the settlement agreement alleges JPMorgan employees knew the loans in question did not comply with underwriting guidelines, but represented otherwise to investors). A whistleblower and former securities lawyer for JPMorgan provided her view on how the misalignment of interest of the bank employees and those responsible for diligence allowed the practice of pushing toxic mortgages to emerge. She explained that supervisors pushed quality control managers to approve sub-standard mortgages because individual compensation was tied to the quantity (without regard to quality) of mortgages the bank purchased. See All In With Chris Hayes, supra note 2. In early 2015, JPMorgan and the DOJ entered into another settlement, which required JPMorgan to pay over $50 million to over 25,000 homeowners in bankruptcy as a result of the bank filing more than 50,000 payment change notices that were improperly signed. See Press Release, U.S. Dep’t of Justice, Trustee Program Reaches $50 Million Settlement with JPMorgan Chase to Protect Homeowners in Bankruptcy (Mar. 3, 2015), http://www.justice.gov/opa/pr/us-trustee-program-reaches-50-million-settlement-jpmorgan-chase-protect-homeowners-bankruptcy.
 See Press Release, U.S. Dep’t of Justice, Standard Chartered Bank Agrees to Forfeit $227 Million, supra note 8.
 Jessica Silver-Greenberg, Standard Chartered Agrees to Settle Iran Money Transfer Claims, N.Y. Times (Dec. 10, 2012), http://dealbook.nytimes.com/2012/12/10/standard-chartered-agrees-to-settle-iran-money-transfer-claims/; see also BBC News, Q&A: Standard Chartered Iran Allegations, BBC (Dec. 10, 2012), http://www.bbc.com/news/business-19157426.
 Dominic Rushe & Jill Treanor, Standard Chartered bank accused of scheming with Iran to hide transactions, The Guardian (Aug. 6, 2012, 19.34 EDT), http://www.theguardian.com/business/2012/aug/06/standard-chartered-iran-transactions.
 See Press Release, N.Y. Dep’t of Financial Services, Statement from Benjamin M. Lawsky, Superintendent of Financial Services, Regarding Signing of Final Agreement with Standard Chartered Bank (Sept. 21, 2012), http://www.dfs.ny.gov/about/press/pr1209211.htm; see also Jessica Silver-Greenberg, supra note 23. Still, it seems that these large settlements may not have been large enough to deter Standard Chartered as reports indicate that the bank may still be processing transactions for entities tied to sanctioned countries. Andrew Zajac & Richard Partington, Standard Chartered Iran-Trade Oversight Extended 3 Years, Bloomberg (Dec. 9, 2014 3:51 PM), http://www.bloomberg.com/news/articles/2014-12-09/standard-chartered-extends-us-prosecution-deal-over-sanctions.
 See Press Release, U.S. Dep’t of Justice, ING Bank N.V. Agrees to Forfeit $619 Million, supra note 8; Press Release, U.S. Dep’t of Justice, HSBC Holdings Plc. and HSBC Bank USA N.A. Admit to Anti-Money Laundering and Sanctions Violations, Forfeit $1.256 Billion in Deferred Prosecution Agreement (Dec. 11, 2012), http://www.justice.gov/opa/pr/hsbc-holdings-plc-and-hsbc-bank-usa-na-admit-anti-money-laundering-and-sanctions-violations; see also Annie Lowrey, ING Bank to Pay $619 Million to Settle Inquiry Into Sanctions Violations, N.Y. Times (June 12, 2012), http://www.nytimes.com/2012/06/13/business/ing-bank-to-pay-619-million-over-sanctions-violations.html; Ben Protess & Jessica Silver-Greenberg, HSBC to Pay $1.92 Billion to Settle Charges of Money Laundering, N.Y. Times (Dec. 10, 2012 4:10 PM), http://dealbook.nytimes.com/2012/12/10/hsbc-said-to-near-1-9-billion-settlement-over-money-laundering/.
 Class Action Complaint, Alaska Electrical Pension Fund v. Bank of America Corp. et al., Case No. 14-CV-07126 (JMF) (Sept. 4, 2014) (Docket No. 1); see also Bob Van Voris and Matthew Leising, Barclays, BofA, Citigroup Sued for ISDAfix Manipulation, Bloomberg (Sept. 5, 2014, 1:02AM), http://www.bloomberg.com/news/articles/2014-09-04/barclays-bofa-citigroup-sued-for-isda-fix-manipulation; Mary Tonkin, et al., Claims for ISDAfix manipulation, Lexology (Oct. 23, 2014), http://www.lexology.com/library/detail.aspx?g=f443ea5a-7afd-4eff-9de5-eb9b6a32c53f.
 Matthew Leising, Banks Rigged Rate at Expense of Retirees, Bloomberg (Aug. 2, 2013, 2:00 AM), http://www.bloomberg.com/news/articles/2013-08-02/swaps-probe-finds-banks-manipulated-rate-at-expense-of-retirees.
 Press Release, U.S. Commodity Futures Trading Commission, CFTC Orders Barclays to Pay $115 Million Penalty for Attempted Manipulation of and False Reporting of U.S. Dollar ISDAFIX Benchmark Swap Rates (May 20, 2015), http://www.cftc.gov/PressRoom/PressReleases/pr7180-15.
 Fin. Crisis Inquiry Comm’n, The Financial Crisis Inquiry Report, at xvii (Jan. 2011), http://fcic-static.law.stanford.edu/cdn_media/fcic-reports/fcic_final_report_full.pdf.
 See id. at xix. Such examples include AIG senior management ignoring the “risks of the company’s $79 billion derivatives exposure to mortgage-related securities” and “Fannie Mae’s quest for bigger market share, profits, and bonuses, which led it to ramp up its exposure to risky loans and securities as the housing market was peaking.” Id.
 Report of Anton R. Valukas, Examiner, In re Lehman Brothers Holdings Inc., Case No. 08-13555 (JMP) (S.D.N.Y. Mar. 11, 2010), available at https://jenner.com/lehman/VOLUME%201.pdf.
 Id. at 4 (“In 2006, Lehman made the deliberate decision to embark upon an aggressive growth strategy, to take on significantly greater risk, and to substantially increase leverage on its capital . . . . Lehman significantly and repeatedly exceeded its own internal risk limits and controls.”).
 Voluntary Petition For Bankruptcy, In re MF Global Holdings Ltd., No. 11-15059 (MG) (Bank. S.D.N.Y. Oct. 31, 2011) (No. 11709).
 Report of the Trustee’s Investigation and Recommendations, In re MF Global Inc., No. 11-02790 (MG) (June 4, 2012) (No. 1865).
 Id. at 15 (“[T]he actions of management and other employees, along with lack of sufficient monitoring and systems, resulted in FCM customer property being used during the liquidity crisis to fund the extraordinary liquidity drains elsewhere in the business . . . .”).
 Futures customer funds to be segregated and separately accounted for, 17 C.F.R. § 1.20(a) (2014) (“A futures commission merchant must separately account for all futures customer funds and segregate such funds as belonging to its futures customers.”).
 See Trustee for the Securities Investor Protection Act Liquidation of MF Global Inc.: Hearing Before the S. Comm. on Banking, Hous. & Urban Affairs, 1–2 (2012) (statement of James W. Giddens, Trustee for the Securities Investor Protection Act).
 See 18 U.S.C. § 1350 (2002).
 The PRA and the FCA are the successor entities to the Financial Services Authority. The PRA is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers, and major investment firms operating in the United Kingdom, while the FCA is responsible for retail and wholesale conduct of business regulation, regulation of markets, and the prudential regulation of firms not authorized by the PRA.
 See Taylor Wessing, et al., Accountability, Risk and Reward: The New Regulatory Framework for Senior Managers, Lexology (Oct. 2, 2014), http://www.lexology.com/library/detail.aspx?g=22a66309-f216-4fbe-8fa2-efaaaa9416a7.
 See Press Release, U.S. Dep’t of Justice, ING Bank N.V. Agrees to Forfeit $619 Million, supra note 8; see also Press Release, U.S. Dep’t of Justice, HSBC Holdings Plc. and HSBC Bank US N.A. Admit to Anti-Money Laundering and Sanctions Violations, supra note 26.
 Claire A. Hill & Richard W. Painter, Why SEC Settlements Should Hold Senior Executives Liable, N.Y. Times Dealbook, (May 29, 2012, 11:28 AM), http://dealbook.nytimes.com/2012/05/29/why-s-e-c-settlements-should-hold-senior-executives-liable/ (“[A]ll of a bank’s most highly compensated officers — those making more than $1 million a year — should be personally and collectively liable for paying a significant portion (perhaps 50 percent) of S.E.C. fines levied against their bank . . . in proportion to the size of their compensation that year.”).
 See, e.g., Alan D. Morrison & William J. Wilhelm, Jr., The Demise of Investment-Banking Partnerships: Theory and Evidence, 63 J. FIN. 311 (2008), https://www.law.virginia.edu/pdf/olin/0506papers/morrison_wilhelm.pdf.
 Eric Holder, Att’y Gen., U.S. Dep’t of Justice, Remarks on Financial Fraud Prosecutions at NYU School of Law (Sept. 17, 2014), http://www.justice.gov/opa/speech/attorney-general-holder-remarks-financial-fraud-prosecutions-nyu-school-law.
 See id.; see also Helen Cantwell et al., DOJ Proposal Shows Focus on Individuals in Corporate Crime, Law360 (Sept. 30, 2014 10:14 AM), http://www.law360.com/articles/582045/doj-proposal-shows-focus-on-individuals-in-corporate-crime.
 See United States v. Park, 421 U.S. 658, 670–71 (1975).
 See Holder, supra note 53 (explaining that in order to better equip investigators, there must be incentives for witness cooperation and whistleblowers at financial institutions).
 See Jed S. Rakoff, Why Have No High Level Executives Been Prosecuted in Connection With The Financial Crisis?, The New York Review of Books (Jan. 9, 2014), http://www.nybooks.com/articles/archives/2014/jan/09/financial-crisis-why-no-executive-prosecutions/.
 Cf. Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068–69 (2011) (“Many criminal statutes require proof that a defendant acted knowingly or willfully, and courts applying the doctrine of willful blindness hold that defendants cannot escape the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances.”).
 See U.S. Dep’t of Justice, U.S. Attorneys’ Manual 9-28.700 (1997), available at http://www.justice.gov/usam/usam-9-28000-principles-federal-prosecution-business-organizations#9-28.700 (“Cooperation is a mitigating factor, by which a corporation . . . can gain credit in a case that otherwise is appropriate for indictment and prosecution.”).
 See id. at 9-28.740 (stating that a corporation’s willingness to cooperate is not determinative but may be considered in conjunction with other factors).
 Memorandum from Deputy Att’y Gen. Sally Quillian Yates, Individual Accountability for Corporate Wrongdoing (Sept. 9, 2015), http://www.justice.gov/dag/file/769036/download.


The “unclean hands” defense and its evil twin sister, the “after-acquired evidence” doctrine, are used by many employers facing a lawsuit as an excuse to dredge up anything they can find on the employee suing them. Before filing a lawsuit against your employer or former employer, you need to anticipate that they will do this, and be prepared. If you have too many skeletons in your own closet, you may want to think twice about bringing a suit in the first place. This does not mean, however, that employers’ attempts to soil the employee suing them always succeed – in fact, there are many ways that these attempts fail, as a matter of law.
Basically, the “unclean hands” defense is based on an equitable principle that a defendant should not have to pay someone accusing the defendant of wrongdoing when the plaintiff himself or herself is just as guilty of the bad practice that is the subject of the suit. The “after-acquired evidence” doctrine gained strength after the United State Supreme Court’s decision in McKennon v. Nashville Banner Publishing Co. (1995) 513 U.S. 352, which has been applied to hold that for someone suing based on violation of an important statute, like the anti-discrimination laws, he or she cannot have the entire suit eliminated based upon “unclean hands” – because of the public policy promoted by the statute itself. In other words, a discriminator should not get off the hook just because the discrimination victim had some problems, too – because our society has determined that discrimination is wrong. However, if the employer or ex-employer finds viable “after-acquired evidence,” the relief that the discrimination victim himself or herself might receive can be limited in some cases – i.e., if the employer can show that the employee would have been terminated anyhow for something the employer has learned after the suit was filed (a common example is proven fraud in your employment application), then the employee may not have a right to get his/her job back, or get back pay after the date on which the after-acquired evidence was discovered.
In California, under the Fair Employment and Housing Act (FEHA) and whistleblower protection laws in the Labor Code, the unclean hands doctrine is inapplicable, when the defense purports to relate to acts occurring in the course of the employment relationship. See Murillo v. Rite Stuff Foods, Inc. (1998) 65 Cal.App.4th 833, 848-851 (FEHA case in which neither the after-acquired-evidence rule nor the unclean hands doctrine was applicable to claimed sexual harassment damages, notwithstanding her misconduct in misrepresenting her citizenship status). In general, “equitable principles may not be applied in opposition to statutory enactments or to defeat public policy established by the Legislature.” Angelucci v. Century Supper Club (2007) 41 Cal.4th 160, 171 (citing 13 Witkin, Summary of Cal. Law (10th ed. 2005) Equity, § 3, p. 285; McKennon, 513 U.S. at 360–362.
As the United States Supreme Court noted in McKennon, “We have rejected the unclean hands defense ‘where a private suit serves important public purposes’” like the elimination of workplace discrimination. McKennon, 513 U.S. at 360-361. See also Mortgages, Inc. v. U.S. D. Ct. For D. of Nev. (9th Cir. 1991) 934 F.2d 209, 213 (district court erred when it denied a motion to dismiss the counterclaims based on bad faith by False Claims Act (FCA) relators, reasoning that “[t]he FCA did not intend to ameliorate the liability of wrongdoers by providing defendants with a remedy against a qui tam plaintiff with ‘unclean hands.’”); Ramirez v. Greenpoint Mortg. Funding, Inc., 268 F.R.D. 627, 638 (N.D. Cal. 2010) (Henderson, J.) (rejecting unclean hands defense in discrimination case based on public policy favoring broad equitable relief).
California law concerning public policy statutes is consistent with the federal precedents: “Where an employer has fired a worker in violation of a statutory ban on discrimination in the workplace, the purpose and effect of the antidiscrimination statutes are unacceptably undermined by a principle that would allow a fact that played no part in the firing decision to bar any recovery.” Camp v. Jeffer, Mangels, Butler & Marmaro (1995) 35 Cal.App.4th 620, 633. “When a plaintiff alleges wrongful termination in violation of public policy, that cause of action, like one based on discrimination, serves sufficiently important public purposes to outweigh a claim of unclean hands.” Id. at 635-636; General Dynamics Corp. v. Superior Court (1994) 7 Cal.4th 1164, 1181 (“[T]he doctrinal foundation of the public policy tort claim is not so much the plaintiff's continued interest in employment as the preservation of the public interest.”); De Burgh v. De Burgh, 39 Cal. 2d 858 (1952) (noting that “equity does not deny relief on the ground of plaintiff’s unclean hands when to do so would be harmful to the public interest”).
The only exception to the prohibition on an unclean hands defense to a public policy-driven statutory claim is where an employee's subsequently discovered wrongdoing would have prevented employment by the defendant from the outset. See, e.g., Murillo, 65 Cal.App.4th at 845 (plaintiff misrepresented herself as a legal resident alien, and her misrepresentations about her immigration status “went to the heart of the employment relationship,” and so precluded reinstatement remedy); Camp, 35 Cal.App.4th at 636, 638-639 (plaintiffs were convicted felons; defendant was precluded by law from employing convicted felons). In Camp, misrepresentations by the employees jeopardized the defendant law firm’s contracts with a government agency and potentially subjected the firm to accusations that it had made false statements to the government. Id. at 636-637. Camp suggested that unclean hands defenses are inapplicable where the supposed violations by the plaintiff relate to “internal, self-imposed requirements for the job” or its “voluntarily adopted policy.” Id. See also Cooper v. Rykoff-Sexton, Inc. (1994) 24 Cal.App.4th 614, 618-619 (reversing a summary judgment for employer on “unclean hands” where there was resume fraud by an employment discrimination plaintiff, finding that automatic forfeiture of claims was “too harsh a penalty” in many cases of misconduct – holding, “Where an employer has fired a worker in violation of a statutory ban on discrimination in the workplace, the purpose and effect of the antidiscrimination statutes are unacceptably undermined by a principle that would allow a fact that played no part in the firing decision to bar any recovery.”).
In sum, public policy underlying FEHA, Cal. Lab. §1102.5, and other important statutory protections, may prevent application of the unclean hands defense in your case, unless the evidence the employer possesses meets the tough “would have prevented employment” or “heart of the employment relationship” standard.
It is also important to argue that misconduct triggering the unclean hands doctrine must relate directly to the transaction at issue. See Camp, 35 Cal.App.4th at 638-639; Farahani v. San Diego Community College Dist. (2009) 175 Cal.App.4th 1486, 1495 (defense “closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief”) (emph. added). See also Lane v. Micro-Focus (U.S.), Inc. (W.D.Wash. 2010) 2010 WL 5018146, at *11 (dismissing unclean hands defense where Defendants did not show any “willful misconduct that has an immediate and necessary relation to Plaintiff’s requested relief”).
If the supposed misconduct does not relate to any actions you took for personal gain, then unclean hands may not be applicable. See CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631, 643 (finding that the allegedly “unclean” conduct of the plaintiffs differed from that of the defendant because the plaintiffs “had nothing to gain”). See, e.g., Dawe v. Corrections USA (E.D. Cal. 2010) 2010 WL 682321, at *26-27 (rejecting unclean hands defense where defendants did not meet initial burden of presenting evidence that plaintiffs’ actions were wrongful). Whistleblower statutes, in particular, tend to recognize that sometimes “wrongdoers might be rewarded” – but establish that such a cost is worthwhile to incentivize those knowledgeable about unlawful schemes to step forward. Recall, supra, Mortgages, 934 F.2d at 213 (discussing that the FCA was established to “set a rogue to catch a rogue”). If you were not complicit in the scheme you have helped expose, or if you feared retaliation in speaking out about it, then the unclean hands defense may not apply.
A defendant employer should also be precluded from advancing an “after-acquired evidence” defense unless the employer learns for the first time about employee wrongdoing that would have led to the discharge in any event. See Camp, 35 Cal.App.4th at 632. It is the employer’s burden to “establish that the wrongdoing was of such severity that the employee in fact would have been terminated on those grounds alone if the employer had known of it at the time of the discharge.” McKennon, 513 U.S. at 362-363. See also Brahmana v. Lembo, 2011 WL 1674993, at *9-11 (N.D.Cal. 2011) (rejecting equitable defense where employee failed to disclose criminal record or prior incarceration, even though employee handbook noted material omissions on employment application could result in termination); Cooper, 24 Cal.App.4th at 617-619 (facts of the case did not support a complete bar to relief, because the employee had a spotless and competent work record with the employer until he was terminated); Murillo, 65 Cal.App.4th at 845-84 (after-acquired-evidence rule would not have supported summary adjudication of wrongful termination claims, because triable issue existed as to whether employer would have terminated the employee had it known that she was an undocumented alien). Like in Murillo, id., where there was evidence that the employer had hired other undocumented aliens despite knowledge of their immigration status and fraudulent documents, your employer cannot rely upon “after-acquired evidence” where it has acknowledged that it does not terminate other employees for such conduct as is alleged against you.
Perhaps most importantly, if you can show the employer knew of your supposed misconduct while you were employed, and did not terminate you, the “after-acquired evidence” defense is inapplicable. Whereas in Murillo, there was a triable after-acquired evidence issue, because nothing in the record indicated that the employer knew previously that the employee in question was ineligible to work (id., 65 Cal.App.4th at 845-84), in your case, the opposite may be true – the employer may not be in a position to claim recent discovery of any misconduct.
Finally, you may argue that the court should rule upon the defenses in equity – they are only a matter for the jury if they are “so intertwined with legal claims that [they] cannot be separately tried to the judge.” Unilogic, Inc. v. Burroughs, Corp. (1992) 10 Cal.App.4th 612, 623.
If you have questions about the applicability of the “unclean hands” defense or “after-acquired evidence” doctrine in your case, please contact Bryan Schwartz Law.
*Note: nothing in this article, intended to be of general interest, is intended to create an attorney-client relationship or constitute legal advice to you. Each case is different, and Bryan Schwartz Law does not represent you unless you have a signed representation agreement with the firm.
It's scary to learn how much power an employer has. Even when you catch them with their pants down, they can use their Big Brother eyes to seek dirt on you, and fire you on any pretext that seems reasonable.
For an at-will employee, this threshold is fairly low. For implied contracts, contracts, and public employees, the level of seriousness can easily jump up through subjective judgment. Courts are loathe to interfere with employer discretion based on good faith.
It would be important to examine the employee's prior work record, prior warnings and counseling, and whether the Douglas Factors were used in the decisions.
Even if an employee has a record of prior counseling for errant acts, if it was oral or isn't reflected in the performance evaluation, one could imply that it was relatively inconsequential to the employer at that time, and a repeated act is only worthy of a lesser punishment.
The legally sophisticated employer will hold on to records of past indiscretions and use the property right over their electronic equipment to go on a witch hunt for anything remotely resembling the past conduct.
So the plaintiff's attorney should examine whether the employer had reasonable suspicion for the more recent search, or if the employer knowingly violated privacy rights. Even if the employer had an unfettered right to examine, they did so with tortious intent, and nothing good should come from something bad.
If so, the punitive damages should be compounded - an unlawful act intended to defend against another unlawful act. The employer's hands are dirty squared.
How would these "unclean hands" and "after-acquired evidence" cases apply to Federal employees?
Is McKennon sufficiently broad to encompass federal cases, do other federal cases exist, or can California cases be used as persuasive precedent especially if the actions took place in California?
The short answer is that the notion of after-acquired evidence certainly comes up with federal employees, too, as a bar to certain types of relief. 5 CFR 315.805 talks about terminations for pre-appointment conduct, and there are cases where people who raise EEO complaints or MSPB appeals wind up having to fight off terminations based upon problems with their initial employment applications.


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I want to consult an employment attorney to discuss my non-competition agreement. Do you have any suggestions?
Generally, courts look upon noncompetition agreements with some skepticism and have cautiously considered and carefully scrutinized them. Ingram, Covenants Not to Compete (2002), 36 Akron L.Rev. 49, 50. Under English common law, agreements in restraint of trade, including noncompetition agreements, were disfavored as being against public policy, although partial restraints supported by fair consideration were upheld. Lange v. Werk (1853), 2 Ohio St. 519, 527-528, 1853 WL 117, citing Mitchel v. Reynolds (1711), 1 P. Wms. 181, 24 Eng.Rep. 347. In a society in which working men entered skilled trades only by serving apprenticeships, and mobility was minimal, restrictive covenants precluding an ex-employee from competing with his ex-employer "either destroyed a man's means of livelihood, or bound him to his master for life." Raimonde v. Van Vlerah (1975), 42 Ohio St.2d 21, 71 Ohio Op. 2d 12, 325 N.E.2d 544.
Modern economic realities, however, do not justify a strict prohibition of noncompetition agreements between employer and employee in an at-will relationship. "The law upholds these agreements because they allow the parties to work together to expand output and competition. If one party can trust the other with confidential information and secrets, then both parties are better positioned to compete with the rest of the world. * * * By protecting ancillary covenants not to compete, even after an employee has launched his own firm, the law 'makes it easier for people to cooperate productively in the first place.' " KW Plastics v. United States Can Co. (Feb. 2, 2001), M.D. Ala. Nos. Civ. A. 99-D-286-N and 99-D-878-N, 131 F. Supp. 2d 1289, 2001 U.S. Dist. LEXIS 1630, 2001 WL 135722, quoting Polk Bros., Inc. v. Forest City Ent., Inc. (C.A.7, 1985), 776 F.2d 185, 189.
Accordingly, courts in Ohio recognized the validity of agreements that restrict competition by an ex-employee if they contain reasonable geographical and temporal restrictions. Briggs v. Butler (1942), 140 Ohio St. 499, 507, 24 O.O. 523, 45 N.E.2d 757. Such an agreement does not violate public policy if it is "reasonably necessary for the protection of the employer's business, and not unreasonably restrictive upon the rights of the employee." Id. at 508, 24 O.O. 523, 45 N.E.2d 757.
Non-competition agreements are creatures of contract and therefore must satisfy the requirements necessary for the formation of an enforceable contract. One of the most important requirements for an enforceable contract is "consideration," which is something of value given by one party to another in exchange for the promised thing of value.
At one time employees in Ohio argued that a non-competition agreement was unenforcable for lack of consideration unless it was required as a condition to, and at the time of, new employment. This view was supported by the facts of Rogers v. Runfola & Assoc., Inc. (1991), 57 Ohio St.3d 5, 565 N.E.2d 540, in which the Ohio Supreme Court found valid a noncompetition clause in a written contract in which the employer agreed to discharge the employee only for specified reasons. In Runfola the Ohio Supreme Court rejected the argument of the ex-employee that her promise not to compete lacked consideration in light of the "the exchange of mutually beneficial promises." From this, employees argued that a non-competition agreement required valid cause for termination or some other consideration.
It follows that either an employer or an employee in an at-will relationship may propose to change the terms of their employment relationship at any time. If, for instance, an employer notifies an employee that the employee's compensation will be reduced, the employee's remedy, if dissatisfied, is to quit. Similarly, if the employee proposes to the employer that he deserves a raise and will no longer work at his current rate, the employer may either negotiate an increase or accept the loss of his employee. In either event the employee is entitled to be paid only for services already rendered pursuant to terms to which they both have agreed. Thus, mutual promises to employ and to be employed on an ongoing at-will basis, according to agreed terms, are supported by consideration: the promise of one serves as consideration for the promise of the other.
The presentation of a noncompetition agreement by an employer to an at-will employee is, in effect, a proposal to renegotiate the terms of the parties' at-will employment. Where an employer makes such a proposal by presenting his employee with a noncompetition agreement and the employee assents to it, thereby accepting continued employment on new terms, consideration supporting the noncompetition agreement exists. The employee's assent to the agreement is given in exchange for forbearance on the part of the employer from terminating the employee.
As a result, an employer can require non-competition agreements from all of its employees and can terminate, without legal liability, those employees who refuse to sign.
Since non-competition agreements are contracts, the ability of one employer to enforce a non-competition agreement entered into with another employer depends on the law of contract assignment. As a general rule, a party to a contract can assign the contract to another party, unless the contract does not permit assignment or the contract is for a personal, or highly individual, service. For example, P. Picasso, a famous painter, could not contract with Q. Victoria, a rich sponsor, to provide a painting for $1,000,000 and then assign the right to S. Artist, a painting student. The law assumes that the service, providing the painting, is unique and personal to Picasso and cannot be assigned.
Most non-competition agreements are not for personal services. Thus, unless the non-competition agreement itself prohibits an assignment, the agreement can usually be assigned to another employer, who would then have the right to enforce it.
Moreover, assignment of non-competition agreements most commonly arise in the context of a sale of a business. If the sale is accomplished by selling all of the stock of the business, the buyer buys the business that entered into the non-competition agreement and no assignment is necessary. If the buyer merely bought the assets of the business, including the right to enforce the non-competition agreement, then the purchase agreement would control whether the parties assigned the non-competition agreement or not. Therefore, parties to an agreement to purchase the assets of a business should make sure that the agreement assigns to the buyer all contract rights, including employment agreements and non-competition agreements.
A covenant not to compete which imposes unreasonable restrictions upon an employee will be enforced to the extent necessary to protect an employer's legitimate interests.
A covenant restraining an employee from competing with his former employer upon termination of employment is reasonable if the restraint is no greater than is required for the protection of the employer, does not impose undue hardship on the employee, and is not injurious to the public.
Whether the forbidden employment is merely incidental to the main employment.
Raimonde v. Van Vlerah, 42 Ohio St. 2d 21 (Ohio 1975).
The process by which Courts will rewrite overly broad non-competition agreements is known as "blue penciling." It describes the court's ability to redraw geographic, time or other restrictions on an employee's non-competition agreement.
Employers should write narrowly drawn non-competition agreements to avoid second guessing by courts. In almost all cases, courts will enforce agreements that prevent employees from taking unfair advantage of relationships that they developed, or information obtained, during their employment. Therefore, an employer interested in protecting current customers and accounts should write the agreement to place those customers or accounts off limits for a reasonable period of time. In that case, the employer is at a low risk to a successful challenge of the non-competition agreement.
Employees have far less bargaining power during the formation of a non-competition agreement but should nonetheless insist on restrictions that are no greater than necessary to protect the employer. The employee's most effective argument in this context is that a court will rewrite an overly broad agreement and could discard the restrictions altogether. The employee can also argue that both she and the employer benefit by entering into an enforceable agreement, since they will both avoid litigation costs if one side or the other needs to enforce it.
Employees want to believe that they can sign a non-competition agreement today, which a court will not enforce it tomorrow. In most cases, that belief is a myth.
If an employer limits a non-competition agreement to the minimum restrictions necessary to protect its information or relationships, a court will almost certainly enforce it. If the employer overreaches on restrictions, however, a court may not enforce them. Even then, however, the court is not free to invalidate the entire agreement. Rather, it must redraw the restrictions in a manner it considers reasonable. Therefore, employees who sign a non-competition agreement should plan on its enforcement, at least to the extent necessary to protect the employer's legitimate business interests.
If a non-competition agreement contains obligations on the employer's part that the employer does not keep, such as a promise of compensation or ownership in the business, then an employee could sue to rescind the agreement. In that case, the employer's failure to keep its promise, or breach, gives rise to a claim for money damages or rescission. If the employee proves a breach and elects rescission, the court will treat the contract as though the parties never entered into it.
Finally, an employer may waive its right to enforce a non-competition agreement or agree to amend it in a way that permits the employee to pursue a competitive line of work. In both cases, however, the employer must consent. Consequently, the most effective ways to avoid the restrictions of a non-competition agreement are to not sign one in the first place or, having done so, to reach an agreement with an honorable employer that protects it without unreasonably limiting the employee.
My Employment Lawyer's attorney profiles allow mel's attorney's to list their peer ratings, board certifications and writing and speaking accomplishments. You can also see who has contributed articles and answers to mel, and the quality of that work, from their attorney profile.

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Forensic psychiatrists are trained to evaluate defendants for evidence or absence of psychiatric disorders that impair competence or diminish capacity. Following the Daubert decision, guidelines for reliability and relevance of expert evidence have evolved. Thus, experts today need additional preparation (e.g. literature review) prior to offering courtroom testimony. The following articles provide a deeper analysis of forensic psychiatry.
Interview: Potential psychological explanations behind bombings. Dr. Bursztajn is interviewed in the Boston Globe on the recent Boston Marathon bombings. This is further explored on WBUR's CommonHealth: The 'Folie à Deux' Theory of the Boston Bombings.
Case: Stewart v. USA . Dr. Bursztajn's analysis is essential in getting this undue duty to warn case against a VA psychologist dismissed.
Interview: Understanding the Mindset of a Shooter's Parents. Dr. Bursztajn is interviewed for Time.com on the frequently ignored and otherwise silent dimension of the grief not only of the families of the victims of a tragedy but also the grief of the families of the perpetrators.
Interview: The Sergeant in Question: A Portrait of the Accused Shooter of Kandahar. Dr. Bursztajn is interviewed on the apparent disconnect between the prior conduct of the United States soldier accused of shooting 16 Afghani civilians and the details of the incident.
Article: The Rebirth of Forensic Psychiatry in Light of Recent Historical Trends in Criminal Responsibility. Psychiatrists are sometimes misunderstood as "hired guns" whose purpose is to have the guilty exonerated. This widely circulated article by Dr. Bursztajn explains the validity of forensic psychiatric evidence.
Case: Carvajal v. Mihalek, et al. Dr. Bursztajn's reference to an antisocial history in the course of his examination, opinion, and testimony was affirmed on appeal by a panel which included one of the better senior judge writers in the federal judiciary, Guido Calabrese, whose book, Tragic Choices deals with many of the issues of Dr. Bursztajn's book Medical Choices, Medical Chances in a legal context.
Video: Psychology Behind Unthinkable Crimes. Dr. Bursztajn comments in a Fox News story on unthinkable crimes between loved ones and family members.
Death Penalty and Mental Illness: Dr. Bursztajn presents evidence of mental illness in a manner jurors can easily understand.
In State of Illinois v. Chris Coleman (2011) Dr. Bursztajn's work the death penalty mitigation phase on this case overlapped with the abolishment of the death penalty by the Illinois legislature and the promised commutation of any death penalty decided on after this act by Governor Pat Quinn. Despite this, the prosecution chose to pursue the death penalty which was ultimately denied by Judge Milton Wharton who may be the last Judge in Illinois to be faced with this decision.
In State of Iowa v. June Lyman (2007) Dr. Bursztajn presented to the jury his opinion that Ms. Lyman had no general criminal intent at the time of the shooting. Though the prosecution argued for a first-degree murder conviction, the jury returned with a verdict of second-degree which is defined as non-premeditated in the state of Iowa. Articles and video from local television stations are available and here.
In State of Illinois v. Aubrey Tucker (2007) Dr. Bursztajn testified in three phases of the trial: A hearing to suppress Tucker's confession that the defense alleged was coerced, in the guilt/innocence phase regarding Tucker's ability to form specific intent, and in the sentencing phase where the jury found that sufficient mitigating factors were present to preclude a death-penalty verdict.
In State of Washington v. Kevin Cruz (2000) Dr. Bursztajn testified that the defendant was suffering from a variety of symptoms consistent with those of schizophrenic disorders. After a five month trial, defendant's life was spared.
Case: Silverstein v. U.S. Dr. Bursztajn's review of the plaintiff's, Thomas Silverstein, mental state through review of medical and case records and a forensic psychiatric interview of the plaintiff lead to his opinion: "...I do not find evidence of damage to Mr. Silverstein's mental health resulting from the conditions of confinement." This opinion led to the court's granting the Bureau of Prison's Motion for Summary Judgment dismissing the case as reported by the Denver Post.
Article: Outings for Hinckley: Wellness vs. Safety. Dr. Bursztajn is quoted in a Boston Globe article responding to questions on the possible release of Ronald Reagan's would-be assassin, John Hinckley, Jr., who was committed to St. Elizabeth's Hospital suffering from schizophrenia.
Article: The Role of a Forensic Psychiatrist in Legal Proceedings. An overview of the function of forensic psychiatry and how it differs from clinical practice.
Article: National Certification for Forensic Psychiatrists: A Preview of the Post- Daubert Expert. Dr. Bursztajn's article on the effect of the Daubert ruling on the use of expert witnesses and its specific effect on forensic psychiatric testimony.
Article: Daubert Without Prejudice: Achieving Relevance and Reliability Without Randomness. Dr. Bursztajn's article exploring post- Daubert developments in standards for forensic psychiatric evaluation.
Article: Rashomon and the Criminal Law. While mental disabilities can affect rulings, the legal structure that dictates how such testimony can be used is not well understood.
Case: Porter v. McCollum. A unanimous Supreme Court ruled that a Korean War veteran, who likely had PTSD, received ineffective assistance of counsel, where he was sentenced to death for murder and no evidence about his mental state or other mitigating factors were introduced at the penalty phase.
American Association of Legal Nurse Consultants (AALNC) offers information for RNs who are legal nurse consultants (LNCs), for attorneys looking for an LNC, and for RNs who want to become a member of the organization.
Bazelon Center for Mental Health Law supports "legal advocacy for the civil rights and human dignity of people with mental disabilities." This site offers information and resources to support advocacy lawyers, consumer advocacy organizations, state protections, and others.
Case: State of IL v. Aubrey D. Tucker, Jr.
Case: Commonwealth of MA v. Maimoni . Dr. Bursztajn testified that Maimoni suffered from a longtime personality disorder and that the incident triggered a psychosis that further loosened his grip on reality.
Letter: competency to make a will. Dr. Bursztajn's letter to the editors of the American Journal of Psychiatry on the importance of separating the roles of the treating psychiatrist and the evaluating psychiatrist in the assessment of competency.
Review: Are You There Alone? The Unspeakable Crime of Andrea Yates. Dr. Bursztajn's book review for the American Psychiatric Association.
Article: Court Looks at Legal Role for Mentally Ill, New York Times , March 27, 2008. A longstanding area of special interested to Dr. Bursztajn since his article with Tom Gutheil, MD, Clinicians' guidelines for assessing and presenting subtle forms of patient incompetence in legal settings, is the foundational extent and the relationship of specific impairments on the evaluation of diminished capacity in regards to competence to stand trial versus self-representation. See also Dr. Bursztajn's book Psychiatric Ethics and the Rights of Persons with Mental Disabilities in the Community.
Forensic psychiatric testimony can affect sentencing. Since a defendant found to be suffering from a psychiatric symptom often receives a less severe sentence, accurately determining a defendant's psychiatric health is important in judging the severity of the offense and the potential for rehabilitation and future offense prevention.
Report: Recommendation and Report on the Death Penalty and Persons with mental Disabilities. The Commission on Mental & Physical Disability Law's recommendation, which was adopted by the American Bar Association (ABA), had been previously adopted by the American Psychiatric Association, the American Psychological Association, and the National Alliance of the Mentally Ill. The Task Force on Mental Disability and the Death Penalty prepared the recommendation and report. The Task Force was established by the ABA's Section of Individual Rights and Responsibilities. Ronald J. Tabak is Chair of the Task Force.
Case: Bloom v. Calderon "Failure to Tell Psychiatric Expert About Psychiatric History Constitutes Ineffective Assistance of Counsel"
Article: "Federal Sentencing Guidelines Criticized by a Key Supporter"
False Confessions can be based on helplessness, hopelessness, and interrogation dynamics. A forensic psychiatric examination can help evaluate reliability of confession and potential confounding factors. Dr. Bursztajn's evaluated and testified as a forensic neuropsychiatric expert on altered mental states leading to false confessions for Luc Angier. Mr. Angier was a city official wrongly accused of a white collar crime who while depressed confessed to a crime he did not commit (State of Maine v. Angier). Dr. Bursztajn's expert consultation and testimony was seriously considered by the jury in its acquittal of the defendant. Post acquittal, further investigation proved the defendant's innocence.
Article: The Truth About Confessions by Peter Brooks, New York Times , September 1, 2002.
Letter: Suspicious Trials in Iran. Dr. Bursztajn on coerced confessions.
Physical damage or abnormality in the brain can affect behavioral and thought processes. Dr. Bursztajn was among the first experts to be allowed to use brain imaging in the courtroom to support a forensic neuropsychiatric evaluation and testimony.
Case: US v. Sullivan A physical impairment in the brain affected the defendant's moral and legal behavior. The court took his handicap into consideration and assigned a sentence which avoided jailing the defendant and allowed him to continue with rehabilitation.
Article: Brain Abnormality Linked to Pathology.
Article: In Memoirs, Diabetics Tell of Troubles and Triumphs. The need for access to comprehensive psychiatric care for patients with Diabetes.
Article: Deciphering the Adolescent Brain. Findings are toppling old views and stoking old controversies about the brain's coming of age.
Psychiatry, Neurology, Neuropsychiatry Dr. Maurice Preter combining Psychiatry and Neurology.
Article: Mother who lost mentally ill addicted son: The system is 'broken.' Dr. Bursztajn is interviewed on addiction, mental illness, dual diagnosis and therapeutic jurisprudence. Also highlights the need for a forensic psychiatric evaluation to differentiate on a case by case basis mad from bad in the course of mental health illness, addiction treatment, and encounters with the criminal justice system. Also see What we learned during CNN Parents’ chat on mental health and addiction.
Article: In a World of Hazards, Worries Are Often Misplaced. A high risk behavior is most maintained by an individual when it is voluntary and fair. This is particularly true for highly disciplined individuals persisting in a high risk behavior. The New York Times , August 20, 2002.
Article: The Puzzling Red Wine Headache. The neuropsychiatry of red wine headaches. The New York Times , July 17, 2002.
Article: Compulsive Gambling: Overlooked Addiction. The New York Times , May 4, 1999.
Article: In Treating Patients for Pain, a Racial Gap. The New York Times , December 28, 1999.
Article: In J.F.K. File, Hidden Illness, Pain and Pills. Newly disclosed medical files covering the last eight years of Kennedy's life, including X-rays and prescription records, show that he took painkillers, anti-anxiety agents, stimulants and sleeping pills, as well as hormones to keep him alive, with extra doses in times of stress. The New York Times , November 17, 2002.
Article: Like Drugs, Talk Therapy Can Change Brain Chemistry. The importance of providing patients with informed and meaningful choices as to treatment modalities is underscored by this article by Richard A Friedman, M.D. The New York Times , August 27, 2002.
Article: Debate on Acne Drug's Safety Persists Over Two Decades. Can an acne drug cause teenagers to commit suicide? This question returned to the spotlight this month when a 15-year-old boy flew a small airplane into a Florida skyscraper. The New York Times , January 22, 2002.
Article: Proper Scope of Duty to Warn Before Court. This Supreme Judicial Court of Massachusetts ruling from October 8, 2001, may expand the duty of pharmacies to include warning against harmful side effects of medication.
Article: Kids Using More Psych Drugs. ADD and the need for a comprehensive psychiatric evaluation in light of prescription drug misuse.
Article: When O. J. Didn't Have His Game Face. Dr. Bursztajn is quoted in New York Magazine on the side effects of steroid abuse.
Article: Narcotic OxyContin: Savior or Killer? Oxycontin is the best-selling narcotic pain medication in the United States. It earns about $1 billion every year for its manufacturer, Purdue Pharma. Just two pills a day can stave off the worst pain for patients who suffer from cancer or serious injury but now the painkillers's benefits are overshadowed by reports of addiction and death.
The Pharmaceutical Manufacturers Association website where consumers can search for information about pharmaceutical products. Topics covered include the development and use of drugs, including Medicare prescription drug coverage, cancer medicines in development, news about biotechnology drugs, and information on the Directory of Patient Assistance Program, which offers medications to those who can't afford to purchase them.
Tobacco Cessation Guideline. The latest drugs and counseling techniques for treating tobacco use and dependence from the Surgeon General's Office.
Article: Serial groper has Fairfax County neighborhood on edge. Forensic Psychiatry can help law enforcement by profiling individuals who engage in compulsive and aggressive assaults. Dr. Bursztajn is quoted in the Washington Post, March 13, 2013.
Book Review: Dr. Bursztajn's book review for the American Journal of Psychiatry (March 2006) on avoiding the pitfalls and keeping the promises of profiling perpetrators.
Interview: Emotional trauma may have kept Amy Lord from fleeing. Dr. Bursztajn is interviewed in the Boston Globe about the brutal killing of Amy Lord in South Boston and why she may not have tried to escape when the opportunity arose. The Boston Globe , July 26, 2013.
Dr. Bursztajn is interviewed and quoted in several news articles surrounding the mass shooting at Sandy Hook Elementary School in Newtown, CT on December 14, 2012.
Interview: Harold J. Bursztajn '72, on mental-health care. Dr. Bursztajn is interview in the Princeton Alumni Weekly on the role of mental health care in the aftermath of the Newtown shootings.
Article: Anguished search for an explanation. The Washington Post , December 16, 2012.
Article: Autism Is Not Psychosis. The Atlantic , December 19, 2012.
Article: DNA of Newtown Shooter Adam Lanza to Be Studied by Geneticists. ABC News , December 27, 2012.
Article: Adam Lanza's DNA To Be Studied. The above article picked up by the Huffington Post , December 27, 2012.
Interview: Tucson Shooting Renews Gun Control Debate. Dr. Bursztajn is interviewed on NPR's Talk of the Nation on February 16, 2011 on the public safety issues arising out of the shooting of Congresswoman Gabrielle Giffords. The January shooting of Rep. Gabrielle Giffords (D-AZ) and 18 others in Tucson has reignited two issues in the debate over guns in America: the legality of extended magazine clips like the one used by the suspected shooter, and access to firearms by the mentally ill.
Article: Never Released, Yet Often Missing. The effects of overloading the public sector due to managed care cutbacks on patient care and public safety. Dr. Bursztajn quoted in The Washington Post , February 10, 2003.
Letter to the Editor: The Fateful Gamble in Moscow. Dr. Harold J. Bursztajn. Validating or legitimizing terrorist-chosen grievances as "root causes" or equating the deaths of those murdered by terrorists with casualties incurred during self- defense efforts encourages copycat terrorists internationally, New York Times , October 29, 2002.
Article: The Mind of a Suicide Terrorist: Experts Explain the Thinking of Suicide Terrorists. Dr. Bursztajn quoted in an ABC News story, September 19, 2001.
Article: Terrorists Copy-Cat Minds. Dr. Bursztajn's article on terrorists around the world who are studying our reaction to the terrorist amongst us, hoping to take that reaction into account in the design of future terrorist events, October 23, 2002.
Article: New York Shock Therapy Police Recruits. Lessons being imparted in a classroom at the United States Holocaust Memorial Museum, as part of a spreading police education program that the museum counts among its most prized achievements as it celebrates its 10th anniversary, the recruits had finished a two-hour museum tour, a history lesson that stunned many recruits to sobered silence. There were its depictions of Jewish ghettos and the Nazis' gleeful exercise of brutal authority, its photographs of victims, its collection of the shoes of the exterminated, its relentless documentation of savage cruelty and, perhaps most stunning of all, of the world's indifference to it.
Article: Forensic Psychiatry and Social Issues: A British Perspective. Mental illness, suicide in prisons and destructive behavior.
Article: Childhood Abuse and Adult Stress. A study links trauma, depression and response to anxiety.
Bureau of Justice Statistics The US Department of Justice provides a web site that contains statistics on workplace violence from 1992-1996.
Dr. Bursztajn's consulting services include prevention, crisis response, and post-crisis post-vention for traumatized co-workers.
Article: Grandson's erratic behavior detailed. Dr. Bursztajn is quoted in a March 18, 2009 Boston Globe article on the recent killing of Eleanor Clark by her grandson, James Clark.
To specialists, the acts by Weston that preceded the attack in the Capital can help to explain his psychological problems. Right before the attack, he had killed various cats (using a gun) in Varmeyer. His apparent motive for that was that he had been expelled from his house by his father. The killing of animals is many times a sign that there is a "homicidal psychosis", says Harold Bursztajn, from the Harvard Medical School.
Article: Preventing Neo-Nazi Cult Violence in Our Schools. Dr. Bursztajn's comments on the Littleton killings.
Article: Troubled Adolescents Need A Double Safety Net. An article by Dr. Bursztajn and his colleague Irene Coletsos.
Article: Attacks Spur Call to Force Medications. Chicago Tribune article quoting Dr. Bursztajn.
Article: Major Mental Illness & Violence: Quick Fix vs. Commitment to Care.
Article: Mental Disorder Defies Docs. Dr. Bursztajn is interviewed by the Boston Herald regarding the Edgewater Technologies Shootings in Wakefield on January 2nd, 2001.
The Program for Young Negotiators is designed to build negotiation skills in both teachers and students. The book, Young Negotiators by Jared R. Curhan, is a wonderful guide to negotiating conflict resolution in the best interest of a just, non-violent community. [Houghton-Mifflin, 1998, Boston, MA].
Violence is sometimes a problem in legal proceedings. Attorneys and judges in litigation related proceedings have been cautioned about violence prevention. Dr. Bursztajn's work in judicial education and courtroom violence has been widely recognized.
Article: On Guard: Law as a High-Risk Profession. Dr. Bursztajn is quoted on recent violence against Judges, Maryland Daily Record , November 10, 2005.
Article: Violence Against Attorneys and Judges. Dr. Bursztajn's article on dealing with potential violence in litigation-related circumstances.
Article: NFL Star Brandon Marshall Has Borderline Personality Disorder. Dr. Bursztajn's is interviewed on ABC News helping to explain Borderline Personality Disorder and its effect on the Miami Dolphins' wide receiver Brandon Marshall and the incidents of alleged domestic violence between him and his wife.
Article: Doctor Bolsters Insanity Defense. A jury overcomes prejudice against the insanity defense. Brattleboro Reformer , Vermont 1999.
Letter to the Editor: An Offensive Against Bioterrorism , Boston Globe , October 4, 2001. Also published in The Wall Street Journal , October 3, 2001 under "Bio-War: Best Defense is a Good Offense"
Article: The Cult of Terrorism. Dr. Bursztajn's interview with InteliHealth News Service, October 1, 2001.
Article: Bioterrorism Prevention Means Changing our Minds Dr. Bursztajn's discussions with his medical school colleagues who are experts in infectious disease lend special urgency to the concerns expressed in the media about bioterrorism via smallpox or anthrax.
Article: Focused, Not Crazy: Experts Explain the Thinking of Suicide Terrorists. The psychological profile of the World Trade Center and Pentagon terrorists differs from earlier profiles of Terrorists. Dr. Bursztajn's interview with ABC News that the terrorists responsible for the World Trade Center and Pentagon disasters did not display symptoms of those who typically contemplate suicide.
Article: Managing Traumatic Stress: Tips for Recovering From Disasters and Other Traumatic Events. APA Guidelines.
Center for Disease Control. Resource Page that includes section on disease/agent specific information to biological and chemical agents as well as some useful links.
Nuremberg Code. The ten principles of ethics governing the use of human subjects.
Protection of Human Subjects in Research. Home Page of the US Air Force Academy's Institutional Review Board.
United States Holocaust Memorial Museum. The Official Trial Record at Nuremberg.
Gilman, S. L. (1985). Difference and Pathology: Stereotypes of Sexuality, Race and Madness . Ithaca: Cornell University Press.
Jackson, J. L., & Bekerian, D. A. (1997). Offender Profiling: Theory, Research and Practice (Wiley Series in Psychology of Crime, Policing and Law) Chichester, UK: Wiley.
Legal Resources: The Committee for Public Counsel Services (CPCS) is a fifteen-member body established by Chapter 211D of the Massachusetts General Laws to oversee the provision of legal representation to indigent persons in the Commonwealth. For more information, see the CPCS Mental Health Litigation Home Page.
Dr. Bursztajn has an active patient care practice and consults to physicians, institutions, judges, and plaintiff and defense counsel nationally.

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1. ORS 280.100 provides, in effect, that if the directors of a subdivision wish to carry out one of the programs envisioned in ORS 280.050 without a vote of the electors, they may do so by resolution if the project can be financed with funds available to the subdivision within the restrictions of Art XI, § 11 of the Oregon Constitution.
2. The word “financing,” as used in ORS 280.050, involves more than the sequestration of a gift or grant into a fund, and connotes more than simply the face amount of a loan.
3. “Financing,” as used in ORS 280.050, includes an interest rate, term, rate of repayment, and other necessary provisions and conditions of a loan; it involves the creation of a security interest; and it means a loan on terms the borrower can repay.
to manage moneys received under a federal water grant, is not a recognized purpose under ORS 280.050 because the purpose does not involve the “financing” (as that term is used in ORS 280.050) of the cost and the service which the subdivision has the lawful power to perform.
Argument on demurrer held October 18, 1978, in the courtroom of Oregon Tax Court, Salem. Decision on demurrer for plaintiff rendered October 26, 1978.
Ira W. Jones, Senior Assistant Attorney General, Salem, represented plaintiff.
Manville M. Heisel, Medford, represented defendant.
The plaintiff, acting under ORS 294.495 and 310.070 (relating to plaintiff’s supervisory authority with respect to the Local Budget Law, ORS 294.305 to 294.520) has appealed to the Oregon Tax Court pursuant to ORS 294.485(2), seeking a determination that the defendant’s tax levy for the 1978-1979 year, in respect of the tax proposed to be levied for the Bear Creek Valley Sanitary Authority interceptor general obligation bonds, is void because of defendant’s failure to use all budget resources available to it in lieu of a levy of additional taxes. Plaintiff argues that the defendant is seeking, by indirection, to do an act which, under Local Budget Law, it is forbidden to do directly. The factual background can be found in the decision in Bashaw et al v. Bear Creek Valley San. Author., 7 OTR 196 (1977) (appeal pending in the Oregon Supreme Court).
In Bashaw, the court noted that while the defendant’s board of directors has the power and the duty to adopt and administer fiscal policies, the wisdom of such policies is not the question before the court if the Local Budget Law requires a budget and levy procedure contrary to the policy.
Plaintiff has argued that ORS chapter 280 is not applicable under the facts in this case and that the determination of the court for the defendant’s 1977-1978 fiscal year is equally applicable to the 1978-1979 year.
[1.] The novel aspect of Or Laws 1945, ch 453 (now codified as ORS 280.040 to 280.140), which includes ORS 280.100, is the creation of the ten-year serial levy, on vote of the electors, which results in a levy “outside” the restrictions of the Oregon Constitution, Art XI, § 11. Most of the sections within ORS 280.040 to 280.140 relate to the serial levy and the necessary procedures relating to it. And then, in contrast to the use of a serial levy, the legislature inserted a section 5 (now codified as ORS 280.100) which says, in effect, that if the directors of the subdivision wish to carry out one of the programs envisioned in section 3 (ORS 280.050) without a vote of the electors, they may do so under ORS 280.100 by resolution if the project can be financed with funds available to the subdivision within the restrictions of Art XI, § 11. It appears to the court that this election is not available to the defendant under the facts of this suit.
finance an interceptor sewer system. However, the word “financing” (the most significant word used in ORS 280.050 for the purposes of this suit) involves more than the sequestration of a gift or grant into a reserve fund. It connotes more than simply the face amount of a loan and includes an interest rate, the term, the rate of repayment and other necessary provisions and conditions and means a loan on terms that a borrower can repay. Reese v. Walker, 151 N.E.2d 605, 608 (Munic Ct. of Cincinnati, Ohio 1958). It involves the creation of a security interest. Shelton v. Erwin, 472 F.2d 1118, 1120 (8th Cir 1973). Defendant’s financing of the Bear Creek Sewer Interceptor System was accomplished through a vote of the interested electors and the issuance of general obligation bonds (referred to as “BCI bonds”). Because there was a complete financial structure initiated and approved in respect to the project, utilizing a statute separate and apart from ORS 280.100, it follows that the subsequent use of ORS 280.100, invoked by the defendant, must have some other purpose or reason. And, indeed it does. As shown by its language, Resolution No. 78-10 (which relies for its validity on ORS 280.100) has a purpose which does not involve the financing of the Bear Creek Sewer Interceptor System, but is an attempt to sequester grant funds received under the Federal Water Quality Administration Grant No. WPC-ORE-279 and to use these funds for the redemption of the BCI bond issue of February 1, 1970, under the policy of the defendant’s board as expressed in Bashaw, supra. The board’s policy is to redeem bonds and pay off principal and interest under a particular time scheme, not required by the terms of the Federal Water Quality Administration Grant. The board of directors seeks to levy a tax in 1978-1979 which could be paid fully from the “resource” of the granted funds held in reserve, in contravention of the Local Budget Law.
may be used for establishing the financial reserve or special fund permitted by ORS 280.100. As counsel for defendant has pointed out in defendant’s memorandum, at 3, none of the tax levies of the sanitary authority for payment in whole or in part of the principal and interest on the 1970 general obligation bond issue is subject to the Oregon Constitution, Art XI, § 11 (i.e., they lie “outside” the constitutional restrictions). Defendant’s counsel further notes (Memo, 3) that no issue has been raised by the pleading in this matter as to whether the funds as transferred to the BCI bond redemption fund were within the limitation imposed by the constitution and then stipulates: “The purpose of the fund creation was expressly to enable the second phase of financing the interceptor sewer project.” In the court’s view, “the second phase of financing” is strictly a concept of the board of directors of the defendant and does not come within the meaning of the word “financing” as used in ORS 280.050.
IT IS FURTHER ORDERED that the following parts of defendant’s Amended Answer are stricken: page 1, lines 20-26; all of pages 2 and 3; page 4, lines 1-11.