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Former utility CEO’s contract dispute may be confidential

On Behalf of | Feb 14, 2020 | Business Litigation |

According to news reports, the employment contract of the former CEO of the Florida utility company JEA contains provisions that call for private arbitration to resolve disputes. The CEO was ousted and is currently embroiled in a legal dispute with JEA’s board of directors. If the dispute is forced into arbitration as called for in the contract, the public might not learn about what occurred or how the dispute is resolved.

The CEO was forced out of his job and was terminated for cause for several reasons. The Office of General Counsel found that he had failed to disclose his conflicts of interest, misled the members of the board, violated his fiduciary duties, and lied to the Jacksonville City Council. His attorney is challenging each of those contentions.

The CEO insisted on including the private arbitration provision in his contract for for-cause termination. His predecessor’s contract did not contain a similar provision. If his termination is found to not be for cause, the CEO will be entitled to a golden parachute of $800,000. Since JEA is owned by the community, that means that a substantial amount of the public’s money may be at stake. If he does not force the dispute into arbitration, the confidentiality clause will not apply. If he does, the city believes that the resolution of the dispute would still be a matter of public record.

Confidentiality and arbitration clauses are rarely used in contracts with government executives because of the public’s right to know. When legal disputes arise, these types of clauses may force the parties into private arbitration out of the view of the public. Businesses that are embroiled in legal disputes involving contracts with arbitration clauses might benefit from getting help from experienced business litigation attorneys.