Companies subject to the reporting requirements of the Securities and Exchange Act are required to file a Current Report on Form 8-K with the Securities and Exchange Commission within four business days of the retirement, resignation or termination of specified executives. Initially, the Commission proposed that companies be required to disclose the reasons for the departure of these officers. However, several commenters expressed a variety of concerns about the proposal, including a fear that companies could be subjected to defamation suits. In the Adopting Release, the Commission wrote “We believe these concerns are valid and have therefore eliminated this proposed requirement.” Now, these concerns have become a reality in California.
In an opinion issued yesterday, the California Court of Appeal affirmed a trial court’s decision to let stand a former officer’s causes of action for defamation, invasion of privacy, and unfair business practices against his former employer. Hawran v. Stylli, Cal. Ct. Appeal Case No. D059019 (Sept. 13, 2012). The officer’s claims arose from a Form 8-K and press release issued by the company announcing the officer’s decision to resign. The Court of Appeal agreed with the trial court that the employer was not entitled to any of the privileges set forth in Civil Code Section 47, including the privilege for “official proceedings” in Section 47(b)(3).
The opinion by Justice Terry B. O’Rourke is quite lengthy and requires a fair understanding of California’s Anti-SLAPP statute, but is important reading for anyone involved in reviewing press releases and Form 8-Ks disclosing the departure of officers.
Eiusdem Generis
In response to my post yesterday regarding the status of the chairman of the board as an officer, one of my colleagues notes that the phrase “and such other officers” in Corporations Code Section 312(a) supports the conclusion that the chairman of the board is an officer. He asks, “How likely is it that when we list A, B, C, D, and ‘other officers,’ B, C, and D are officers, but A is not?”
Since everything sounds better in Latin, there is actually a term for this – eiusdem generis. The phrase can be translated as “of the same race” and lawyers have been using it since at least the time of the great Roman lawyer, Marcus Tullius Cicero. In 67 B.C.E., for example, he wrote in a short letter to Atticus: “quicquid eiusdem generis habebis dignum Academia tibi quod videbitur ne dubitaris mittere et arcae nostrae confidito (whatever you will have of this same type that will seem worthy of ‘Academia’, don’t hesitate to send to me having confidence in our treasure chest).”
It seems that the phrase is now the subject of a public kerfuffle between Justice Antonin Scalia and Judge Richard Posner, as analyzed in this blog post written by University of Richmond Law Professor Kevin C. Walsh. See also ProfessorBainbridge.com for additional discussions of this contretemps.
