Wrongful Termination: Business Owner Hit for $1.5 Million in Damages
An Ale
xandria federal court judge has awarded a plaintiff employee more than $1.5 Million in damages against her former employer stemming from allegations, which included sexual harassment, breach of contract, and constructive discharge. In the case of Wynne v. Birach, the employee, Elizabeth Wynne, sued her former boss and his company, Twin Star Holdings, alleging the owner of the company, Sima Birach, Jr., sexually harassed her, cheated her out of money owed under her employment agreement, and forced her to submit fraudulent financial documents.
You might ask, what was Mr. Birach’s response to these serious allegations? The answer: Nothing!
Mr. Birach and his company never put in a response to the allegations and basically ignored the proceedings. This resulted in Ms. Wynne obtaining a victory by default. In and of itself, it is somewhat remarkable that a company would fail to defend itself against such allegations. However, more significant than that, the court’s opinion sets forth at least two very important findings for employment law cases.
First, the court took judicial notice of the fact that Mr. Birach was the sole director of Twin Star Holdings, and based upon the uncontested allegations in the Complaint, Mr. Birach regularly used corporate funds to pay for his personal expenses. This finding allowed the court to pierce the corporate veil and hold Mr. Birach personally liable for the damages in the case. It is rare that a company’s owner is personally tagged for damages in a wrongful termination case. The Wynne case emphasizes, once again, the need for companies to observe corporate formalities to avoid the possibility of personal liability against corporate owners.
Second, Ms. Wynne was not terminated, but actually resigned from her position. Nevertheless, the court found that she was “constructively discharged” from her job because her boss subjected her to “repeated and blatant” sexual harassment, and she was repeatedly asked to violate Virginia law by submitting fraudulent financial documents. This is significant because courts in Virginia rarely find that an employee has been subjected to working conditions so intolerable that they have no other choice but to resign.
These two important findings from the Wynne case should not be diminished just because the employer did not show up to fight. The court ruled against Ms. Wynne on several of her other claims made under the Virginia Human Rights Act and against her on her assault claim; so she did not automatically win her constructive discharge and piercing the corporate veil claims because the employer defaulted. Rather, the court looked at the facts asserted and found they were sufficient to establish these claims.
Based upon prior rulings from the federal and state courts in Virginia, some employment law practitioners thought that obtaining a constructive discharge finding was virtually impossible in Virginia. The Wynne case assures us that is not the case.
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