Davenport v. LaRue-Baker1

General Information

Erin Davenport was a bond analyst with the leading securities firm LaRue-Baker.

In early August of last year, Erin was a guest analyst on the popular financial news show "Money Talks." During the show, Erin made statements that not only surprised the securities community but also sent investors into a trading frenzy. First, Erin made a quip about California Governor Gavin Newsom in response to a question about the state's recent energy crisis and contractual dealings with energy companies.

She remarked, "It sounds like he's a graduate of the Tony Soprano School of Negotiations." When asked her opinion about analysist darling Yoda Enterprises, LLC ("Yoda"), she quipped, "Yoda is highly overrated. Talk about the Emperor having no clothes. I'd recommend a big sell before Yoda is exposed."

The show moderators laughed at Erin's statements and responded, "You've got to be kidding. Yoda is the major player in the pharmaceuticals industry and one of the largest corporations in America. In the last 5 years, Yoda has had phenomenal growth and is certainly an investor favorite."

Erin retorted, "Let's put it this way. Yoda's Chief Financial Officer could write a book about 'fuzzy math.'"

They all laughed and then cut to commercial and the next guest.

After taping the show, Erin went on vacation to the Seychelles for two weeks. When she returned to work, she found that all files and items in her office had been removed.

*Problem drafted by Mavis Gragg and Maureen Weston, Associate Professor, Pepperdine University School of Law, for the 2002 ABA Representation in Mediation Regional Competition. Copyright 2002, American Bar Association, Section of Dispute Resolution

A letter addressed to Erin was on the desk and stated that her employment with LaRue-Baker had been terminated, effective immediately. A final payment for that month was enclosed.

The Director of Security then told Erin to leave the premises within one hour. She tried unsuccessfully to speak with LaRue-Baker Vice President Alex Johnson. The only answer Erin got from Johnson's administrative assistant was, "Your services are no longer needed. We're in the business of keeping clients, not losing them."

Erin then stormed into the office of LaRue-Baker President Ryan LaRue. She complained that the termination was without justification. LaRue claimed that Erin's dismissal wasdue to the fact thather performance over the last 18 months had been (1) detrimental to the firm; (2) that manyof Erin's recommendations had been factually unsupported and inconsistent with the firm's overall interests; and (3) Erin just was not "a team player."

Erin incredulously replied, "This is really about Yoda, isn't it?"

LaRue countered, "Yeah, nice job scaring off one of the biggest clients this firm would ever land. All those months courting Yoda for an underwriting deal went down the drain. And thanks for taking an extended and unauthorized two-week vacation after your "Money Talks" performance. You left us fielding calls from furious investors, not to mention Yoda's CEO."

LaRue then cut off the conversation.

In the months after Erin's firing, the stock market mania quickly plummeted, and the securities industry, including LaRue-Baker, was in critical financial condition.

Shortly after Erin's negative recommendation, Yoda experienced significant downturn due to its failure to obtain FDA approval for Bo-Tux, a treatment alternative that had been promoted as the ultimate cure for cellulite.

A number ofYoda executives cashed out stock options before news of the Bo-Tux non-approval became public. Quickly thereafter, Yoda's top executive resigned with a $10 million severance package.

Panic ensued and Yoda's stock quickly tanked.

Erin has since filed this lawsuit against LaRue-Baker alleging,inter alia, (1) wrongful termination and (2) violation of her civil rights.

The parties agreed to participate in court-annexed mediationin an attempt toresolve this dispute.

You represent Plaintiff Erin Davenport for the limited and exclusive purpose of mediation.

Based on the foregoing Background and reasonable inferences you may draw therefrom, develop a Representation Plan for the upcoming mediation. The content and headings in the document should be as follows:

1-The Interests of Erin Davenport; 2-The Interests of La-Rue BakerSecurities;

3-Value-Creating Options Responsive to the Identified Interests; 4-Rationale for the Negotiation Style You Will Employ in theMediation;

5-Plan for Strategic Use of the Mediator in Plenary Sessions and Caucuses.