Engstrom And Stockwell Get New Trial Date In Microsoft Hostess Bar Whistleblower Claim

May 18, 2016

Today the King County trial court set a trial date in this case for June 2017.

Click here to see Engstrom and Stockwell scheduling order.

Click here to see 2015 Seattle Times article

Click here to see 2015 Reuters article

 

Court Of Appeals overturns King County Trial Judge and Returns Hostess Bar Wrongful Discharge Case Against Microsoft For Trial

April 8, 2016 

Today the Court of Appeals sent the wrongful discharge claim of two former Microsoft executives back to the trial court for trial after the plaintiffs and Microsoft agreed that the trial court’s ruling dismissing the case did not conform with rulings by the Supreme Court.

This case involves former Microsoft Managers Eric Engstrom and Ted Stockwell, who had filed a lawsuit against Microsoft alleging that they were wrongfully discharged for refusing to sign off on expense reports submitted by a subordinate because they believed that money allegedly being billed for dinners included improper payments for hostess bars, and potentially for prostitutes, to benefit potential Microsoft corporate partners in Korea.  Management asked Engstrom and Stockwell to drop the complaint, they would not, and they got laid off.

Engstrom worked for Microsoft since the 1990s, and is credited with being one of three inventors of DirectX, which are the application programming interfaces, upon which Xbox is based. Engstrom was in charge of creating technology for Windows that allows software developers to incorporate audio, video, and animation into their programs. He was a “partner” level employee meaning he was in the top 1% of Microsoft employees for compensation.

Stockwell worked for Microsoft since the 1980s, and became a high-level program manager. He was a “principal” level employee meaning he was in the top 3% of Microsoft employees for compensation.

The complaint alleges that in early 2011, Stockwell became concerned with vaguely described “entertainment expenses,” some for thousands of dollars, that a subordinate submitted for reimbursement. The subordinate told Stockwell that he was meeting with customers at “hostess bars,” Stockwell asked the subordinate if he was “expensing prostitution services of hostesses,” which the subordinate denied.

Stockwell notified Engstrom, his manager, about the amounts of the expense reports and told him that he believed the subordinate was “expensing hostess bars” and potentially prostitution. Stockwell and Engstrom were both aware that in Korea and other parts of Asia, “hostess bars” often provide sexual services to their customers.

Engstrom reported to his boss, Corporate Vice President Erik Jorgensen, of their concerns. Stockwell gave the subordinate a low performance evaluation as a result. Jorgensen referred Engstrom and Stockwell to Human Resources Manager Jeff Williams, who received the same report from Plaintiffs,

The complaint alleges that Williams called Stockwell at home after work and asked him to drop the complaint against the subordinate and to raise his performance rating.

Stockwell responded that he would do as requested, but only if Jorgenson sent him an email asking that he agree to the plan and confirming what was being requested. HR Director Williams responded, “Oh, wow” and dropped the request.

The Complaint alleges that after this incident, the plaintiffs’ careers went off track and they were laid off in late 2013 and early 2014.

Jack Sheridan, the attorney representing the plaintiffs, said, “our appellate courts have done their jobs and clarified the law of wrongful discharge, so that we can get back to preparing for trial.” According to Sheridan, “the trial judge mistakenly adopted Microsoft’s argument that he should follow older Supreme Court wrongful discharge case law from 2005. Three decisions from the Supreme Court published last year clarified the law of wrongful discharge and made it obvious that the old case law did not apply here.”

The case will likely be set for trial sometime in 2017.

021616 Engstrom and Stockwell COA opinon 040816 E&S mandate from COA

040816 E&S mandate from COA

Click here to see complaint.

Why do the policies under the Foreign Corrupt Practices Act apply to this case?

 

RETALIATION IN HOSTESS BAR WRONGFUL DISCHARGE CASE: Engstrom and Stockwell v. Microsoft

June 18, 2015

Seattle, WA

King County Trial Judge Dismisses Hostess Bar Wrongful Discharge Case Against Microsoft–Plaintiffs will appeal

Today King County Superior Court Judge Sean O’Donnell dismissed the wrongful discharge claim of two former Microsoft executives finding that federal laws adequately protect shareholders and citizens from improper actions by American corporations at home and abroad, and thus he ruled that Washington law will not support plaintiffs’ claim against Microsoft.

This case involves former Microsoft Managers Eric Engstrom and Ted Stockwell, who had filed a lawsuit against Microsoft alleging that they were wrongfully discharged for refusing to sign off on expense reports submitted by a subordinate because they believed that money allegedly being billed for dinners included improper payments for hostess bars, and potentially for prostitutes, to benefit potential Microsoft corporate partners in Korea.  Management asked Engstrom and Stockwell to drop the complaint, they would not, and they got laid off.

Engstrom worked for Microsoft since the 1990s, and is credited with being one of three inventors of DirectX, which are the application programming interfaces, upon which Xbox is based. Engstrom was in charge of creating technology for Windows that allows software developers to incorporate audio, video, and animation into their programs. He was a “partner” level employee meaning he was in the top 1% of Microsoft employees for compensation.

Stockwell worked for Microsoft since the 1980s, and became a high-level program manager. He was a “principal” level employee meaning he was in the top 3% of Microsoft employees for compensation.

The complaint alleges that in early 2011, Stockwell became concerned with vaguely described “entertainment expenses,” some for thousands of dollars, that a subordinate submitted for reimbursement. The subordinate told Stockwell that he was meeting with customers at “hostess bars,” Stockwell asked the subordinate if he was “expensing prostitution services of hostesses,” which the subordinate denied.

Stockwell notified Engstrom, his manager, about the amounts of the expense reports and told him that he believed the subordinate was “expensing hostess bars” and potentially prostitution. Stockwell and Engstrom were both aware that in Korea and other parts of Asia, “hostess bars” often provide sexual services to their customers.

Engstrom reported to his boss, Corporate Vice President Erik Jorgensen, of their concerns. Stockwell gave the subordinate a low performance evaluation as a result. Jorgensen referred Engstrom and Stockwell to Human Resources Manager Jeff Williams, who received the same report from Plaintiffs,

The complaint alleges that Williams called Stockwell at home after work and asked him to drop the complaint against the subordinate and to raise his performance rating.

Stockwell responded that he would do as requested, but only if Jorgenson sent him an email asking that he agree to the plan and confirming what was being requested. HR Director Williams responded, “Oh, wow” and dropped the request.

The Complaint alleges that after this incident, the plaintiffs’ careers went off track and they were laid off in late 2013 and early 2014.

Jack Sheridan, the attorney representing the plaintiffs, said, “the reason we have appellate courts is to correct the errors committed by trial judges.  In this case, the trial judge mistakenly adopted Microsoft’s argument that he should follow older Supreme Court wrongful discharge case law from 2005, and ignore the Supreme Court’s 2013 decision on wrongful discharge, which supports our case.”

Sheridan said that the plaintiffs will appeal.  Sheridan also said, “This is David and Goliath litigation.  The trouble with legal errors at the trial court level is that these mistakes can cost time and money to persons who are fighting for their economic survival owing to the wrongs committed against them by big companies or big government. These plaintiffs will now have to wait another year or two before getting their case in front of a jury.  That’s why we say, ‘justice delayed is justice denied.’”

Plaintiffs have thirty days to appeal.

FEDERAL JUDGE SLAMS MICROSOFT FOR TAKING “HOSTESS BAR” CASE OUT OF STATE COURT AND SENDS CASE BACK
April 22, 2015
Seattle, WA
Today Federal Judge James Robart sent the Engstrom and Stockwell “hostess bar” wrongful discharge case back to state court after Microsoft had removed the case to federal court arguing that the Plaintiffs’ claims raised important “federal questions” even though the wrongful discharge claim is brought exclusively under state law.
On February 25, 2015, former Microsoft Managers Eric Engstrom and Ted Stockwell filed a lawsuit in King County Superior Court alleging that they were wrongfully discharged under state common law for refusing to sign off on expense reports submitted by a subordinate because they believed that thousands of dollars allegedly being billed for dinners included improper payments for prostitutes at “hostess bars” to benefit potential Microsoft customers in Korea. Plaintiffs allege that management asked Engstrom and Stockwell to drop the complaint, they would not, and they got laid off.
On March 25, 2015, Microsoft filed a “notice of removal” in the federal district court in Seattle announcing that Microsoft was bringing the state case into federal court because the hostess bar case “implicates a significant federal issue.”

Judge Robart, the federal judge assigned to the case, questioned whether federal jurisdiction was appropriate and on April 7, 2015, in an Order To Show Cause, challenged Microsoft to justify the removal and gave Microsoft 14 days to convince the judge that federal jurisdiction was proper.

On April 21, 2015, Microsoft conceded it had no arguments in support of removal and stated, “Microsoft does not oppose remand of this case to King County Superior Court. The next day, on April 22, 1015, Judge Robart signed an order remanding the case back to state court and instructing the parties, “to seek any further relief to which [the parties] believe they are entitled from the courts of the state of Washington, as may be appropriate in due course . . . .”

Jack Sheridan, the attorney representing Engstrom and Stockwell, stated, “In our view, Microsoft was trying to prevent state trial judges and state appellate court judges from deciding what is a purely state law issue. We are back where we wanted to be and back on track to take this to a King County jury. We will seek attorney fees from Microsoft for the time we wasted in dealing with this issue.”

The Engstrom and Stockwell wrongful discharge case against Microsoft is slated to go to a jury trial in March 2016.

Click here to see Microsoft Notice of Removal

Click here to see Order to Show Cause Re Remand

Click here to see Microsoft response to Court’s order

Court’s Order re Remand

MICROSOFT BACKS DOWN AFTER PLAINTIFFS FILE MOTION TO PROTECT THEIR COUNSEL FROM “BULLYING”

March 20, 2015

Seattle, WA

Former Microsoft Managers Eric Engstrom and Ted Stockwell are claiming an early victory against Microsoft for successfully opposing what their attorney calls “Microsoft’s bullying trial tactics.”

This week the Honorable Sean O’Donnell signed a stipulated order in which each party agreed not to file motions when the other party’s attorneys are unavailable. The order stems from a motion filed by Engstrom and Stockwell claiming that Microsoft was threatening to file emergency motions against them while their attorney was tied up in a two-week jury trial in another case.

Jack Sheridan, the plaintiff’s counsel, said, “I considered their actions to be bullying, so I filed a motion seeking protection, and Microsoft backed down and signed a stipulated order.” According to Sheridan, “The order has two important effects. First, I can focus on my other whistleblower trial, which is in Olympia, without interference from Microsoft, and second, Judge O’Donnell is now protected from being removed from the case by Microsoft.”

Under Washington law, RCW 4.12.050, in a civil case, any party has one opportunity to remove the assigned judge simply by filing what’s called an affidavit of prejudice. The affidavit simply has to state that a party thinks the judge would be unfair, and once filed, the judge is removed. Sheridan said, “The trick is that once a judge makes a discretionary ruling, that judge cannot be removed under the statute.” Sheridan said, “We wanted Judge O’Donnell to stay on this case, because of his reputation for working to protect vulnerable women, and now that he’s signed the stipulated order, he will stay on.” Sheridan said, “We consider Judge O’Donnell a good draw because our case alleges that the plaintiffs were wrongfully discharged for refusing to sign off on expense reports submitted by a subordinate, because they believed that money, allegedly being billed for dinners, included improper payments for prostitutes to benefit potential Microsoft customers in Korea.”

Plaintiffs’ Motion to Enforce Notice of Unavailability claimed that soon after Sheridan came on the case, he learned that Engstrom had made a few audio recordings while at work. According to Sheridan, “Engstrom recorded meetings with a few Microsoft managers to discuss his performance, because he was afraid of what they were doing and that the only witnesses would be his adversaries who he believed were removing him because of the hostess bar issue.” Sheridan said, “Mr. Engstrom didn’t have the benefit of counsel, and didn’t realize that his attempt to protect himself with a ‘spy pen’ he bought at Fry’s constituted a misdemeanor.”

Sheridan directed that the recordings be placed with a third party and a copy provided to Microsoft.

Sheridan said, “After I returned or safeguarded all the files, I thought I would be able to focus on my upcoming trial.” So on March 5, 2015, Sheridan filed a notice of unavailability, which is a typical filing in King County, and which, in Sheridan’s experience, is honored by attorneys practicing in Seattle, because he had a two-week jury trial beginning in Thurston County on Mary 16, 2015. The notice protects the attorney from having to respond to motions filed in other cases during the trial.

Microsoft’s counsel sent a letter on the 5th, and spoke with Sheridan on March 6, 2015, by telephone. Microsoft’s letter stated:

While Microsoft appreciates your oral representation to me that your clients no longer retain any Microsoft information or recordings and have not used or disclosed such information or materials, the seriousness of this issue requires sworn testimony. Given the criminal misconduct, we cannot wait for the routine discovery process to unfold to ensure Microsoft’s information – and its employees’ rights – are protected.

Microsoft demanded sworn statements from the plaintiffs, which is not required by the Civil Rules. Microsoft went on to demand:

If your clients will not provide sworn statements, Microsoft anticipates seeking assistance from the court to ensure protection of its information and employees.

According to Sheridan, in the phone call, Microsoft’s counsel claimed that the need to get sworn statements from Engstrom and Stockwell was an “emergency,” and unless Sheridan produced sworn statements immediately, he would not promise that Microsoft would not file an emergency motion while Sheridan was tied up in trial, even though, according to Sheridan, there was no emergency since he had safeguarded the files.

According to Sheridan, “After we filed the Motion To Enforce Notice of Unavailability, Microsoft backed down and agreed to honor my notice of unavailability and to sign a stipulation to that effect.”

Also, the “criminal misconduct” alleged in the Microsoft letter, in reference to Engstrom and Stockwell, is describing the same conduct committed by Microsoft’s counsel, which recently lost an appeal in which DWT was a defendant in a case claiming that an attorney in the firm secretly recorded phone calls with a witness using a court reporter.

In DILLON v. SEATTLE DEPOSITION REPORTERS, LLC, a Washington Company; DAVIS WRIGHT TREMAINE, LLP, a Washington Company; and JAMES GRANT, Mr. Dillon met with lawyers at the same law firm as here, and there, the lawyer secretly recorded a witness phone call without telling the witness using a court reporter.

The Court of Appeals sent the case back to trial and wrote:

Although Grant (the lawyer) informed Dillon that “Thad” (the court reporter) was present during the first call, Grant disingenuously introduced [Thad] Byrd as if he were a Davis Wright and Tremaine employee “taking notes,” not a third party transcribing the conversation. Even worse, Grant and Kennan never told Dillon about the presence of another person during the second call.

The Engstrom and Stockwell wrongful discharge case against Microsoft is slated to go to a jury trial in 2016.

Click here to see 030615 Engstrom-Stockwell motion for relief

Click here to see 030615 Engstrom-Stockwell JPS Declaration

Click here to see DWT letter to Sheridan

Click here to see Stipulation & Order Enforcing Notices of Unavailability – signed

Blank Engagement Agreement

February 25, 2015

FORMER MICROSOFT EXECUTIVES SUE FOR WHISTLEBLOWER RETALIATION

Seattle, WA

Today former Microsoft Managers Eric Engstrom and Ted Stockwell filed a lawsuit in King County Superior Court alleging that they were wrongfully discharged for refusing the sign off on expense reports submitted by a subordinate because they believed that money allegedly being billed for dinners included improper payments for hostess bars, and potentially for prostitutes, to benefit potential Microsoft customers in Korea.  Management asked Engstrom and Stockwell to drop the complaint, they would not, and they got laid off.

Engstrom worked for Microsoft since the 1990s, and is credited with being one of three inventors of DirectX, which are the application programming interfaces, upon which Xbox is based. Engstrom was in charge of creating technology for Windows that allows software developers to incorporate audio, video, and animation into their programs. He was a “partner” level employee meaning he was in the top 1% of Microsoft employees for compensation.

Stockwell worked for Microsoft since the 1980s, and became a high-level program manager. He was a “principal” level employee meaning he was in the top 3% of Microsoft employees for compensation.

The complaint alleges that in early 2011, Stockwell became concerned with vaguely described “entertainment expenses,” some for thousands of dollars, that a subordinate submitted for reimbursement. The subordinate told Stockwell that he was meeting with customers at “hostess bars,” Stockwell asked the subordinate if he was “expensing prostitution services of hostesses,” which the subordinate denied.

Stockwell notified Engstrom, his manager, about the amounts of the expense reports and told him that he believed the subordinate was “expensing hostess bars” and potentially prostitution. Stockwell and Engstrom were both aware that in Korea and other parts of Asia, “hostess bars” often provide sexual services to their customers.

Engstrom reported to his boss, Corporate Vice President Erik Jorgensen, of their concerns. Stockwell gave the subordinate a low performance evaluation as a result. Jorgensen referred Engstrom and Stockwell to Human Resources Manager Jeff Williams, who received the same report from Plaintiffs,

The complaint alleges that Williams called Stockwell at home after hours and asked him to drop the complaint against the subordinate and to raise his performance rating.

Stockwell responded that he would do as requested, but only if Jorgenson sent him an email asking that he agree to the plan and confirming what was being requested. HR Director Williams responded, “Oh, wow” and dropped the request.

The Complaint alleges that after this incident, the plaintiffs’ careers went off track and they were laid off in late 2013 and early 2014.

Click here to see complaint.

Click here to see case schedule.

Why do the policies under the Foreign Corrupt Practices Act apply to this case?

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