More on the IBM v. Visentin case in Southern District of New York

I have been following this one. PACER has been fairly active since January, with an appeal by IBM to the Second Circuit, which is the next-level, appellate court above SDNY, and there is a counterclaim by Giovanni Visentin.

To recap the story: Giovanni “John” Visentin was a senior executive in IBM Corporation up until January 19. He was made an offer by Hewlett Packard, and decided to take it. Visentin resigned, and offered to transition the job; but IBM decided to end his employment immediately and get hold of his laptop. (You need to be an employee to have an IBM-issued laptop, and, of course, if they don’t want you anymore, for whatever reason, they want the laptop back ASAP!)

IBM had had Visentin sign a non-compete agreement. So that same week, they took Visentin into court, in order to try and stop him from working for Hewlett Packard.

Now, I want you to notice how quickly this all happened:

“late in the evening of January 18, 2011”: HP makes offer to Visentin

January 19, 2011:
Visentin resigns from IBM

January 20, 2011: IBM sues in federal district court for the Southern District of New York.

January 24, 2011:
Judge Cathy Seibel sets a show cause hearing on a temporary restraining order.

February 16, 2011:
Chief Judge Loretta Preska, to whom the case had been reassigned, denies the relief sought by IBM. You can read the memorandum here.

That is all quite something. Not even one month went by, from the time that John Visentin gave his notice, that the U.S. District Court already issued some ruling on the matter.

I was curious to know what, exactly, is in the non-compete. I couldn’t get that on PACER, but I did get the Defendant’s Proposed Findings of Fact and Conclusions of Law.

The way IBM portrays its business interests, according to what they sought to prevent Mr. Visentin from being involved in;


the IBM that describes itself in, ehem, matters of breach of contract and discrimination in its Japan functions, sound like two different companies.

With Mr. Visentin’s non-compete, IBM sought to prevent him from working anywhere in the world where there was some possible chance that he would compete with IBM or its affiliates in those places. In short, IBM was saying that Visentin agreed only to work in his career line if it was for IBM. No place else.

If a lawyer for Visentin were to ask, however, what IBM’s stance is when it comes to a question of breach of contract by one of its foreign, wholly-owned subsidiaries, or a Title VII matter involving one of its foreign, wholly-owned subsidiaries, that lawyer would likely hear an entirely different IBM! In that corporate alternate universe, any IBM affiliate outside of America is a separate corporation that makes its own decisions, is not controlled by IBM, and is not in any way related to IBM except for the fact that they are both named IBM. (In lawyer lingo, IBM is saying that the “single employer doctrine” does not apply with regard to its affiliates, and that the affiliates do not have “minimum contacts” with any part of the United States.)

So which is it?

In the Visentin matter, IBM created a non-compete contract that was global in scope. When IBM is on one side of the “v”, it wants to enforce an overbroad contract that is applicable anywhere in the world.

When IBM is on the other side of the “v”, it frankly doesn’t have one clue about what those similarly-named foreign affiliates are up to, and would want you to prove not just any connection between, say, IBM USA and IBM Japan, but all the connections, just in case any handful or one of them were flukes.

[Update: a few of the readership feel that I am not being my more typical straight-forward or blunt self. Well, yes. Because it’s about topics in my life that are in flux right now.

But the gist of it is—and if you’ve been reading along you should have this already—I got screwed out of a job in Tokyo. In early 2008, I agreed to an “initial period” contract employment arrangement to provide accounting support at the rate of 1,000,000 yen a month. As you Japan-side readers know, what you ought to seek out is regular employment, not contract employment (even though both may involve a sheet of paper that you sign.)

On March 7th of that year, the lead accountant was let go, and I was given her role. In exchange for this, I wanted any end date removed from any document with my employer. As the people in control of the situation were in Australia, this was not easy. I had to negotiate over the phone, and through e-mail. The supposed representative director of the company did not actually live in Japan, so there was no way to do this face-to-face.

I had the contractual term crossed out and sealed. Like so:

In my experience, this is what you do in Japan. Because if you just let the thing hang, and use other evidence, the old contract will have a way of springing back to life. The Japanese will act as if you are defacing or voiding the whole thing if you write on it, but that is highly unlikely. What it does is it ruins their nice little document, though. Because they go to drag out their neat little invalid piece of paper, and you drag out the exact same thing, except showing the modification that came later.

Sure enough, this is what they did. Everyone else in the unit (overwhelmingly Japanese) got continued regular employment in the American multinational’s Japan subsidiary, and I got: a term-limited contract.

I suppose what the people didn’t expect, is that I would go to the EEOC. As a “controlled” subsidiary of an American parent, the big international company (referenced above!) has to respect the Title VII discrimination protections of every American citizen wherever it is doing business.

(I actually thought this was the quicker way to get to the bottom of things.)

What the big international company did instead was stonewall for almost two years. The EEOC likes to have an employer statement in 90 days, so the employer statement turned out to be several pages of just arguing that the EEO didn’t have jurisdiction. It is an administrative charge process–not a court!–so the idea that they were even raising jurisdictional issues was over the top. All they had to do was explain what they did.

Months and months passed, and finally in late 2010, there was a substantive response; but one that suggested that there had been some “mistake” or “misunderstanding” in the contracts and the transfers, and so therefore there would not be discriminatory intent. (You see, the intent must be there.) The company ignored the March 7, 2008 event and the changed circumstances, as if these facts had just fallen through the cracks in the big global bureaucracy.

Well, what fell through the cracks was really a prima facie case of breach of contract, so the firm left me no choice. Japanese law is clear on it: it’s regular employment, [a] so-called “sei sha’in” (正社員) status. There is nothing to indicate that it was, anymore, a term-limited contract, or a series of term-limited contracts.

So even this year, it’s been one IBM stall tactic after another. The latest was their asking for a continuance due to some conference the lead attorney had scheduled in Montreal, in June of last year, for June of this year. (Well, wouldn’t they have known about it when the judge scheduled a hearing for this June? Uh! Anyway.) The facts aren’t changing, the law isn’t changing, and so I don’t know what to say.

Isn’t it wild, though, that when the big company wants something, they have the United States federal court system spinning around for them, even though that same system concluded that IBM was full of shit about the threat to the business that Giovanni Vistenin might have posed on leaving to work for another company? But in matters where IBM is supposed to show a little integrity and step up to the plate, we are already counting Year Three down . . . ]

[Update 2/7/12: Chief Judge Preska’s decision was upheld by the U.S. Court of Appeals for the Second Circuit in November 2011.]